Ng Kit Har v Yii Chee Ming

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 26 February 2008
• Neutral Citation: [2008] SGCA 6
• Docket Number: Civil Appeal No 43 of 2007
• Date: 26 February 2008
• Published date: 07 March 2008
• Year: 2008
• Plaintiff Counsel: Thio Shen Yi and Adeline Lee Huay Yen (TSMP Law Corporation)
• Citation: [2008] SGCA 6
• Defendant Counsel: Cheah Kok Lim (Sant Singh Partnership) and Keh Kee Guan (Tang & Tan)
• Court: Court of Appeal (Singapore)
• Subject Matter: Legislative intent and construction of provisions on third-party proceedings,Failure to serve third-party notice before conclusion of main action,Civil Procedure,Whether third-party action validly constituted,Third party proceedings

26 February 2008

V K Rajah JA (delivering the grounds of decision of the court):

1 Within the broad terrain of civil procedure, the rules on third-party proceedings in O 16 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules”) have a narrow but significant role. These rules encourage the combination of a plaintiff’s claim against a defendant (referred to in these grounds of decision as a “main claim”) with a claim by the same defendant against a person who is not already a party to the main claim (a “third-party claim”) if the main claim and the third-party claim are related in the manner delineated in O 16 r 1(1) of the Rules. The court may then either determine both the main claim and the third-party claim simultaneously, or direct a sequential hearing of the third-party action. In this way, the court can determine in a single action the issues in dispute among all the parties involved. This avoids the unnecessary delay and costs occasioned by separate suits as well as the potential conundrum of different outcomes being reached in relation to the same factual issues. It also ensures that the third party is bound by the decision on the main claim. The third-party claim, however, is distinct from the main claim and cannot be affected by any compromise effected vis-à-vis the main claim without the third party’s consent.

2 At its simplest, the mechanics of O 16 of the Rules allow a defendant who has entered an appearance in an action to issue a third-party notice against a third party. When that notice is served on the third party, he shall, by virtue of O 16 r 1(3), be, as from the time of service, a party to the action with the same rights in respect of his defence against any claims made against him in the third-party notice as if he had been sued in the ordinary way in respect of those claims by the defendant.

3 This appeal raised the issue of whether a third-party action can be validly constituted if the third-party notice is served only after the action in respect of the main claim (“the main action”) has ended. We held the answer to be in the negative – in others words, a third-party action is only validly constituted if the third-party notice is served before the main action ends. We now give the reasons for our decision.

The facts

4 In 1999, Banque Nationale de Paris (“BNP”) commenced Suit No 344 of 1999 (“S 344/1999”) against the appellant, Mdm Ng Kit Har (“Mdm Ng”), for the sum of US$4.8m, and Suit No 605 of 1999 (“S 605/1999”) against Mr Tan Teow Gim (“Mr Tan”) for the sum of US$1.7m. The two actions (collectively referred to as “the Main Actions”) were founded on guarantees issued by Mdm Ng and Mr Tan respectively. BNP filed the writ for S 344/1999 on 3 March 1999 and that for S 605/1999 on 22 April 1999. Mdm Ng and Mr Tan filed their defences on 3 May 1999 and 20 May 1999 respectively, and issued third-party notices (collectively referred to as “the Original Third-Party Notices”) against the respondent, Mr Yii Chee Ming (“Mr Yii”), on 25 May 1999 and 1 July 1999 respectively. Under the Original Third-Party Notices, Mdm Ng and Mr Tan claimed an indemnity or contribution from Mr Yii to the extent of BNP’s claims against them in the Main Actions on the basis that they had been acting as nominees or agents of Mr Yii, and/or that Mr Yii had agreed that he would be liable to BNP under the guarantees and/or would indemnify them against any claims made against them under the guarantees.

5 Mdm Ng and Mr Tan, on 26 May 1999 and 1 October 1999 respectively, obtained leave to serve the Original Third-Party Notices on Mr Yii in Malaysia. After a Malaysian law firm effected service, Mr Yii entered appearance in response to Mdm Ng’s third-party notice (“the May 1999 Third-Party Notice”) on 5 July 1999 and sought to set aside the service of that notice. The court did so on 30 August 1999. Notwithstanding that, Mdm Ng subsequently obtained fresh leave to serve the May 1999 Third-Party Notice out of jurisdiction on Mr Yii, but was unsuccessful in effecting personal service.

6 On 19 January 2000 and 13 March 2000, orders for substituted service of the Original Third-Party Notices were made (each of the orders prescribed a different mode of substituted service). On 16 May 2000, a pre-trial conference was held, at which Senior Assistant Registrar Audrey Lim decided that the Main Actions would proceed even though the Original Third-Party Notices had not been served on Mr Yii yet. Counsel for Mdm Ng and Mr Tan agreed with this direction. The Main Actions ended with judgment given in favour of BNP by Amarjeet Singh JC on 9 June 2000.

7 Between 2000 and 2002, further attempts were made to serve the Original Third-Party Notices on Mr Yii, but these were all unsuccessful. Finally, on 16 August 2002, Mdm Ng and Mr Tan purported to serve the Original Third-Party Notices by substituted service, and subsequently applied on 23 September 2003 to enter judgment in default of appearance against Mr Yii. The applications were heard on 6 October 2003, and were disallowed on the ground that Mdm Ng’s and Mr Tan’s third-party actions against Mr Yii were deemed under O 21 r 2(6) of the Rules of Court (Cap 322, R 5, 2001 Rev Ed) to have been discontinued after a year of inactivity. However, on 15 December 2003, Mdm Ng obtained leave to issue a fresh third-party notice against Mr Yii. Thereafter, she tried to serve the fresh notice on Mr Yii twice, but failed on both occasions.

8 On 6 September 2005, Mr Tan rejoined the fray, presumably after realising that Mdm Ng had managed to obtain leave to issue a fresh third-party notice. He similarly applied for leave to issue a fresh third-party notice against Mr Yii. At the hearing of that application on 26 September 2005, Assistant Registrar Yeong Zee Kin directed counsel for Mr Tan (who was also acting for Mdm Ng) to apply for reinstatement of the original third-party notice issued by Mr Tan in July 1999, rather than seek leave to issue a fresh third-party notice. The assistant registrar also directed counsel to take out an application to regularise the May 1999 Third-Party Notice in respect of Mdm Ng’s third-party claim against Mr Yii. Mdm Ng accordingly took out an application to, inter alia, reinstate the May 1999 Third Party Notice. That application was served on Mr Yii on 27 October 2005. Court orders reinstating the Original Third-Party Notices (“the reinstatement orders”) were made on 17 November 2005.

9 On 8 September 2006, Mr Yii applied to set aside the reinstatement orders. On 3 January 2007, Assistant Registrar Denise Wong set aside the reinstatement orders on the ground that Mr Yii would have been unduly prejudiced by the long delay in the third-party proceedings against him. On 16 January 2007, Mdm Ng and Mr Tan appealed against the assistant registrar’s decision.

10 Both appeals were dismissed by the High Court judge (“the Judge”) on 22 March 2007 (see Banque Nationale de Paris v Ng Kit Har [2007] SGHC 101 (“the GD”)). The Judge rejected Mdm Ng’s and Mr Tan’s arguments for reinstatement on three grounds, namely:

(a) when a main action had proceeded without any direction as to third-party proceedings, the doctrine of res judicata would extinguish all pending matters once judgment was given in respect of the main action (see the GD at [3]);

(b) Amarjeet Singh JC had already dismissed the contention which Mdm Ng and Mr Tan continued to maintain against Mr Yii in the third-party proceedings, viz, that they had acted as Mr Yii’s agents (id at [4]); and

(c) Mdm Ng and Mr Tan had not acted with due diligence in proceeding against Mr Yii (id at [5]).

11 Mdm Ng (but not Mr Tan) appealed against the decision of the Judge. Notwithstanding the convoluted case history, the essential facts can be briefly summarised as follows: Mdm Ng failed to effect valid service of the May 1999 Third-Party Notice on Mr Yii before the Main Actions ended with judgment awarded in BNP’s favour on 9 June 2000. She allegedly served that third-party notice on Mr Yii on 16 August 2002, but her third-party action against the latter had, by then, been deemed to be discontinued due to inactivity for more than a year. She therefore sought the reinstatement of the May 1999 Third-Party...