Peng Ann Realty Pte Ltd v Liu Cho Chit and Others

• Jurisdiction: Singapore
• Judgment Date: 14 October 1992
• Date: 14 October 1992
• Docket Number: Suit No 1487 of 1987
• Court: High Court (Singapore)

Peng Ann Realty Pte Ltd

Plaintiff

and

Liu Cho Chit and others

Defendant

[1992] SGHC 266

Goh Joon Seng J

Suit No 1487 of 1987

High Court

Civil Procedure–Costs–Security–Defendants applying for security for costs against plaintiff in financial difficulty–Plaintiff's financial difficulties allegedly due to conduct of defendants complained of in action–Whether plaintiff should be ordered to pay costs–Section 388 Companies Act (Cap 50, 1990 Rev Ed)

The first and third defendants were the plaintiff's directors at the material time. In October 1972, the plaintiff purchased certain lots of land, including Lot 21-26 of Mukim 28. In January 1973, it sold some of the land, including Lot 21-26, to a company (“CIP”), which was incorporated by the second defendant's wife and his daughter (“CT”). On completion of the sale and purchase, the land was conveyed to the fourth defendants (“CDPL”) on CIP's directions. The second defendant was a director of CDPL as well as CIP at the material time. Unbeknownst to the plaintiff, CIP sold part of Lot 21-26 under a sub-sale agreement to the first defendant's wife (“LSS”) and CT; this part of the land later became Lot 1606. Subsequently, the land that was sold to CIP was compulsorily acquired by the Government, except for Lot 1606.

The plaintiff only had knowledge of the sub-sale a few years later when the defendants fell out. The plaintiff alleged that the first and second defendants were aware at all material times that Lot 1606 would not be compulsorily acquired. The defendants had conspired to sell and purchase the land at an inordinately low price. The plaintiff claimed damages for conspiracy, breach of trust, breach of fiduciary and an order that Lot 1606 be reconveyed to it.

Before the assistant registrar, the first and third defendants applied for security for costs under s 388 of the Companies Act (Cap 50, 1990 Rev Ed) (“the Act”). The plaintiff was ordered to provide security for costs in favour of the defendants. The plaintiff appealed.

Held, allowing the appeal:

(1) The court had discretion to order security for costs under s 388 (1) of the Act, having regard to all the circumstances of the case: at [15].

(2) The plaintiff's claim was bona fide and not a sham. The application for security for costs was being used oppressively to stifle a bona fide claim which was not without reasonable prospects of success. While the plaintiff conceded that it was in financial difficulty, its financial position was also allegedly due to the conduct of the defendants complained of: at [16].

Companies Act (Cap 50, 1990 Rev Ed) s 388 (1) (consd)

Companies Act 1985 (c 6) (UK) s 726 (1)

H E Cashin and R Karuppan Chettiar (Murphy & Dunbar) for the plaintiff

Woo Tchi Chu (Robert W H Wang & Woo) for the first and third defendants

Jimmy Yap (Donaldson & Burkinshaw) for the second and fourth defendants.

Goh...