Oversea-Chinese Banking Corp Ltd v Measurex Corp Bhd

• Jurisdiction: Singapore
• Judge: S Rajendran J
• Judgment Date: 08 August 2002
• Neutral Citation: [2002] SGHC 173
• Docket Number: Suit No 921 of 2001 (Registrar's
• Date: 08 August 2002
• Published date: 19 September 2003
• Year: 2002
• Plaintiff Counsel: Johnny Cheo (Cheo Yeoh & Associates)
• Citation: [2002] SGHC 173
• Defendant Counsel: Lee Eng Beng and Meah Tze Hua (Rajah & Tann)
• Court: High Court (Singapore)
• Subject Matter: Defendants actually having 23 days to enter appearance,Pleadings,Whether service of writ proper,O 2 r 1 & O 20 r 11 Rules of Court,Service of writ on defendants' process agent,Deputy registrar allowing application,O 3 r 2(2) & O 12 r 4 Rules of Court,Service,Default judgment,Whether judicial managers at liberty to adopt nomination,Application by plaintiffs to amend default judgment to remove ambiguities,Defendants not entering appearance,Whether defendants' defence having real prospect of success,Nomination of process agent by plaintiffs and defendants,Amendments,Writ,Civil Procedure,Whether deputy registrar's decision justifiable,Setting aside on merits of defence,Application to set aside irregular writ,Process agent under judicial management,Whether to set aside writ,Judgments and orders,Time for entering appearance starting from day of service,Whether defendants suffering prejudice or injustice,When court can set aside irregular writ,Principles governing court's discretion to set aside default judgments,Plaintiffs obtaining default judgment,Whether defendants suffering injustice

default judgment – Whether there was merit in defence raised – Whether defence had real prospect of success.

Facts

The plaintiffs offered Measurex Engineering Pte Ltd ("M-Singapore") various banking facilities, subject to the latter procuring two Deeds of Guarantee from its parent company Measurex Corporation Berhad (‘the defendants’). Later, the plaintiffs sent to the defendants a letter demanding repayment of the loan with interest. Subsequently, the plaintiffs filed a writ against the defendants and served it on M-Singapore. M-Singapore, at the time the writ was served, was under judicial management. The judicial managers, it was alleged, did not forward or notify the defendants of the writ. The plaintiffs applied for and obtained judgment in default of appearance. The defendants appealed.

The defendants alleged that it came to know of the writ and default judgment only some time later. The defendants applied to have the writ and the service set aside on the grounds that: (a) the writ was irregular; (b) the service was irregular; and (c) the default judgment was ambiguous. Alternatively, the defendants sought to have the default judgment set aside and leave to file and serve a Memorandum of Appearance and thereafter file and serve its defence.

On (c), the plaintiffs conceded that the two paragraphs of the default judgment were ambiguous and applied to the Deputy Registrar ("DR") for leave to amend the default judgment so as to remove the ambiguity. The DR allowed this application and dismissed all applications made by the defendants with costs. The defendants appealed against the amended default judgment.

Held

, dismissing the defendants’ appeal

(1) On the scope of O 2 r 1 and O 20 r 11 of the Rules of Court, every omission or mistake in practice or procedure is to be regarded as an irregularity which the court can and should rectify so long as it can do so without injustice: Harkness v Bell followed. In this case, the amendments the DR allowed in the default judgment merely removed the ambiguity that existed in the previous default judgment, caused no injustice to the defendants and were supported and justified by Order 2, r 1, and Order 20, r 11 of the Rules of Court (see 7 and 8).

(2) A court will only set aside a writ on the grounds of irregularity if the circumstances of the case – including the nature of the irregularity – warrant such course of action. The defendants had not in any way been prejudiced by the mistaken statement on the writ that they had 21 days, counting the day of service, to enter appearance. There was no injustice caused to any party by the error in the writ and therefore it would not be set aside (see 11).

(3) There was no irregularity in the service of the writ – cl 33(2) of one of the Deeds of Guarantee specifically provided that service shall be deemed completed on delivery to M-Singapore whether or not the documents were forwarded to the defendants. OCBC had complied with the requirements of cl 33(2) (see 14).

(4) To invoke the court’s discretion to set aside the default judgment on the ground that there was merit in the defence raised, it was not sufficient for the defendants to show that they had an ‘arguable’ defence; they would have to show that the defence had a ‘real prospect of success’ and ‘carried some degree of conviction’. Under cl 8(d) of the Deeds of Guarantee, the plaintiffs’ release of the Singapore dollar guarantee given by one co-guarantor did not lead to the release of the other co-guarantor (who were the defendants) or in any other way prejudice the plaintiffs’ rights under the Deeds of Guarantees given by the defendants. There was therefore no defence to the plaintiffs’ claims under the two guarantees that had a real prospect of success (see 16,17 and 22).

Case(s) referred to

Harkness v Bell’s Asbestos and Engineering Ltd

[1967] 2 QBD 729 (folld)

Philip Securities (Pte) v Yong Tet Miaw

[1988] SLR 594 (folld)

Alpine Bulk Transport Co Inc v Saudi Eagle Shipping Co ("The Saudi Eagle")

[1986] 2 LLR 221 CA (folld)

Legislation referred to

Rules of Court 1997 O 2 r 1, O 20 r 11, O 12 r 4, O3 r 2(2)

English Rules of Court O 2

Companies Act s 227I

Judgment

GROUNDS OF DECISION Cur Adv Vult

1. The plaintiffs, Oversea-Chinese Banking Corporation Ltd ("OCBC"), by a letter of offer dated 30 April 1996, offered to Measurex Engineering Pte Ltd ("M-Singapore") various banking facilities M-Singapore was a subsidiary of Measurex Corporation Bhd ("M-Bhd"). The facilities were subject, inter alia, to M-Singapore procuring two Deeds of Guarantee (for S$3,300,000 and US$2,918,300) from M-Bhd in the form prescribed by OCBC. The Deeds of Guarantee provided, inter alia, that

(a) a certificate by an officer of OCBC as to the monies and liabilities at any time due and owing to M-Singapore would be accepted by M-Bhd as conclusive evidence of that fact;

(b) the guarantee shall be the primary obligation and OCBC was not obliged, before enforcing the guarantee, to make any demand on, take proceedings against or file any claim in judicial management of M-Singapore and that M-Bhd shall be deemed to be principal debtors in respect of all the obligations and liabilities of M-Singapore to OCBC; and

(c) any notice or demand under that guarantee made by OCBC, if sent by post to M-Bhd at their last known address or place of business or residence, would be deemed to have been made on the day following that on which it was posted.

(d) that service of process in any legal action or proceedings in Singapore against M-Bhd shall be deemed to be good service on M-Bhd if served on M-Singapore which was named the process agent in Singapore for the purpose of receiving such process on behalf of M-Bhd.

The two Deeds of Guarantee were duly executed by M-Bhd and received by OCBC in June 1998.

2. On 24 July 2000, OCBC sent to M-Bhd a letter demanding repayment of the sum of US$937,500 together with all interest accruing to date of payment. On 1 September 2000, M-Singapore was placed under judicial management. As at 9 July 2001, the amount remaining unpaid by M-Singapore stood at US$524,333.24 (inclusive of interest). Further contractual interest was chargeable thereon at 3% per annum above the SIBOR rate from 10 July 2001 to the date of payment.

3. OCBC, in a writ against M-Bhd filed on 23 July 2001 and served on 24 July 2001 on M-Singapore as process agent of M-Bhd, claimed:

(i) The sum of US$524,333.24;

(ii) Interest on the sum of US$524,333.24 at the rate of 3% per annum above the SIBOR rate from 10 July 2001 to date of payment;

(iii) Banker’s charges and all other applicable dues from 10 July 2001 until date of full payment;

and costs on an indemnity basis.

4. M-Singapore, at the time the writ was served, was under judicial management. The judicial managers, it was alleged, did not forward or notify M-Bhd of the writ. OCBC, on 16 August 2001, applied for and obtained judgment in default of appearance in terms of the claim. M-Bhd alleged that it came to know of the writ and the default judgment only in October 2001. After obtaining copies of the relevant documents from OCBC, M-Bhd, by way of SIC No. 3170/01, applied, under Order 13, rule 8, to have the writ and the service thereof set aside on grounds that:

(a) the writ was irregular;

(b) the service was irregular; and

(c) the default judgment was ambiguous.

Alternatively, M-Bhd sought to have the default judgment set aside and M-Bhd given leave to file and serve a Memorandum of Appearance and thereafter file and serve its defence.

5. The ambiguities in the default judgment that M-Bhd complained of related to:

(a) the failure in paragraph 2 of the default judgment to quantify the interest payable; and

(b) the failure in paragraph 3 of the default judgment to quantify the amount of banker’s charges and other charges claimed.

Rather than try to justify these two paragraphs, OCBC, at the hearing below, conceded that the two paragraphs were ambiguous and applied to the DR for leave to amend the default judgment so as to remove the ambiguity. The DR allowed this application. The default judgment (with the amendments) read as follows:

"No appearance having been entered by the Defendants herein IT IS THIS DAY ADJUDGED that the Defendants do pay the Plaintiffs:-

1. the sum of US$524,333.24;

2. interest on the said sum of US$524,333.24 at the rate of 3% per annum above the SIBOR rate from 10 July 2001 until the date of full payment. 16 August 2001, being the sum of US$3,956.36;

3. Banker’s charges and all other applicable dues from 10...