Perwira Habib Bank Malaysia Bhd v Soon Peng Yam and Others

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 31 October 1994
• Neutral Citation: [1994] SGHC 273
• Docket Number: Suit No 491 of 1994
• Date: 31 October 1994
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: R Palakrishnan and Malathi Das (Palakrishnan & Partners)
• Citation: [1994] SGHC 273
• Defendant Counsel: Grace Ooi (Khattar Wong & Partners)
• Court: High Court (Singapore)
• Subject Matter: Proper law,Choice of law,Forum non conveniens,Real and substantial connection,Stay of proceedings,Contracts Act 1950 [Mal],Conflict of Laws,Legal burden on respective parties,Guarantee,Contract,Choice of jurisdiction

The application

The first defendant applied by summons in chambers entered No 2326/94 (the first application) for the following orders:

(1) the forum of convenience to determine the action and/or proceedings herein shall be the High Court of Malaya and that:

(a) the writ of summons and statement of claim filed herein be struck out with costs to be taxed; alternatively

(b) further steps and or proceedings in the action herein be stayed.

(2) Further and in the alternative the plaintiffs` writ of summons and statement of claim filed herein be struck out with costs to be taxed pursuant to O 18 r 19 of the RSC 1970 and or under the inherent jurisdiction of the court on the grounds that:

(a) it discloses no reasonable cause of action against the first defendant; and/or

(b) it is frivolous or vexatious; and or

(c) it may prejudice, embarrass or delay the fair trial of the action; and or

(d) it is otherwise an abuse of the process of the court.

(3) In the further alternative, the plaintiffs` writ of summons and statement of claim filed be struck out with costs to be taxed for want of prosecution.

(4) In the event prayers 1, 2, 3 above are not granted, leave be given to the first defendant to file the defence out of time within fourteen (14) days of the order to be made herein.

(5) The costs of and occasioned by this application be the plaintiffs` costs.

On behalf of the second and third defendants a similar application was filed in summons-in-chambers entered No 2610 of 1994 (the second application). Both applications were heard by the learned assistant registrar who dismissed prayer 1 therein with costs to the plaintiffs. The defendants appealed against his decision, I allowed both appeals with costs, set aside the orders made by the learned assistant registrar and further ordered:

(a) that all proceedings in this suit be stayed against the defendants;

(b) that within ten days of my order the defendants appoint Malaysian solicitors to accept service of process in Malaysia from the plaintiffs` Malaysian solicitors.

The plaintiffs have appealed against my decision.

The background

According to the statement of claim, the plaintiffs are a Malaysian bank. At the material time, the three defendants were the directors of a Malaysian company known as Sim Lim Co (M) Sdn Bhd (the company). The company was a customer of the plaintiffs and by an agreement dated 22 January 1980 (the facility) the plaintiffs granted to the company an overdraft facility of RM1m which was subsequently reduced to RM350,000. Amongst the terms for operation of the facility were the following:

(a) the company had to pay to the plaintiffs all outstanding sums with interest upon demand made in writing by the plaintiffs;

(b) the company had to pay to the plaintiffs all costs and expenses the plaintiffs may incur, including costs on a solicitor and client basis, in seeking to obtain payment from the company of all outstanding sums and interest;

(c) the plaintiffs had the right to debit the company`s account for all expenses incurred;

(d) the plaintiffs had the right to cancel or recall the facility or raise the interest rate at their discretion;

(e) the facility was to be guaranteed by the three defendants.

The three defendants executed two continuing letters of guarantee on 28 January 1980 (the guarantee) agreeing thereby to guarantee, severally and jointly, the payment on demand of all the advances made by the plaintiffs to the company in respect of the facility up to the limit of RM4m only with interest and all costs, charges and expenses that may be incurred by the plaintiffs including solicitor and client charges. The guarantee contained the following salient terms:

(1) the guarantee shall be a continuing guarantee and shall continue in force until the whole of the facility together with interest and all charges aforesaid have been repaid to the plaintiffs in full, although the relation of banker and customer may have ceased;

(2) the guarantee and the plaintiffs` rights shall be in addition to and shall not in any way be affected or prejudiced by the plaintiffs` holding or taxing further securities or by varying, releasing or omitting or neglecting to enforce any securities or by the plaintiffs` varying or determining any credit to the company or giving time for payment or granting any other indulgences to or making any other arrangement with or accepting any composition from the company as the plaintiffs think fit without reference to the three defendants.

The plaintiffs by their (Singapore) solicitors made a demand for payment by letter dated 22 January 1994 to the three defendants for the outstandings due from the company but no payment was received.

Immediately after entering an appearance to the writ, the defendants filed the two applications. In support of both applications the first defendant filed an affidavit wherein he deposed (in so far as it is relevant to the orders which I made) as follows:

(1) the plaintiffs had issued a writ against him, the other two defendants and four other parties in Kuala Lumpur under High Court Suit No D4-22-1000-89 (the Malaysian suit) on 5 May 1989 allegedly for breach of the guarantee;

(2) the Malaysian suit was withdrawn against him and several other defendants by the plaintiffs` Malaysian lawyers;

(3) prior to the commencement of this suit he had instructed the defendants` Malaysian lawyers to give notice to the plaintiffs` lawyers that the action should not be commenced in Singapore and that the forum of convenience should be the High Court of Malaya;

(4) in reply to the notice from the Malaysian solicitors, the plaintiffs` solicitors inquired whether the former had instructions to accept service on the defendants` behalf. His Malaysian solicitors replied to say that the Singapore court had no jurisdiction and referred to s 24 of the Malaysian Courts of Judicature Act 1974 (the Malaysian Act). They went on to say ` However, if you undertake to file the writ in the Malaysia High Court, we give you our clients` undertaking to accept service thereof; `

(5) in their letter dated 11 March 1994 the plaintiffs` solicitors disagreed with the views of his Malaysian solicitors and repeated their inquiry whether the latter had his instructions to accept service;

(6) he believed that the forum of convenience should be Malaysia because the alleged cause of action arose in Malaysia and in the absence of an express provision in the guarantee as to the choice of law, ss 23 and 24 of the Malaysian Act would apply;

(7) the plaintiffs are a Malaysian bank without a place of business in Singapore. Further, the account for which the guarantee was given was maintained in Malaysia;

(8) further, the plaintiffs having earlier commenced the Malaysian suit, had already submitted to the jurisdiction of the Malaysian courts and are therefore estopped from commencing this suit; the plaintiffs are at liberty to file this action afresh in Malaysia;

(9) in suing the defendants in Singapore the plaintiffs are not only bypassing the Rules of the High Court in Malaysia but are also abusing the process of the Singapore court;

(10) the plaintiffs` delay in commencing these proceedings had prejudiced him as the amount due and outstanding in particular interest charged, had increased considerably in the interval (the plaintiffs` current claim is in the region of RM668,600.18).

The plaintiffs` deputy general manager Tan Kwe Hee (Tan) filed an affidavit in reply to the first defendant`s wherein he:

(1) confirmed that the plaintiffs had commenced and subsequently discontinued, the Malaysian suit against the three defendants but with liberty to file an action afresh;

(2) stated that by virtue of s 16 of the Supreme Court of Judicature Act (Cap 322) (the Act) the plaintiffs are advised that they are entitled to sue the defendants in Singapore as all three defendants are residing in Singapore;

(3) asserted that as a matter of convenience legal action has been commenced in Singapore to avoid delay attendant upon an application for leave to serve a writ issued...