Powercore Pte Ltd v D+B Projects Pte Ltd (United Overseas Bank Limited, garnishee)

• Jurisdiction: Singapore
• Judge: Clement Julien Tan Tze Ming
• Judgment Date: 05 June 2017
• Neutral Citation: [2017] SGDC 157
• Court: District Court (Singapore)
• Docket Number: Originating Summons 195 of 2016, DC/SUM 876/2017
• Year: 2017
• Published date: 13 June 2017
• Hearing Date: 19 April 2017
• Plaintiff Counsel: Mr Kelvin Chia Swee Chye (M/s Lumen Law Corporation)
• Defendant Counsel: Mr Ng Yeow Khoon (M/s KhattarWong LLP)
• Subject Matter: Civil Procedure,Judgments and Orders,Enforcement Banking,Garnishee Orders
• Citation: [2017] SGDC 157

Deputy Registrar Clement Julien Tan Tze Ming: Introduction

This is an application by United Overseas Bank Limited (the “Garnishee”) to set aside a final garnishee order obtained by Powercore Pte Ltd (the “Judgment Creditor”) on 14 February 2017 (the “Final Order”) on the ground of mistake. The Garnishee had mistakenly informed the Judgment Creditor that there was monies to be attached when there was, in fact, none. The Judgment Creditor accepts that a mistake has occurred but takes the position that it has suffered prejudice as a result and that the Garnishee should remain bound by the Final Order.

The hearing of this application took place before me on 19 April 2017 and I reserved my decision. Pursuant to my directions, parties tendered further submissions on 9 May 2017. I now set out the grounds of my decision.

Background facts

The Judgment Debtor is indebted to the Judgment Creditor pursuant to an Adjudication Determination dated 28 October 2016 (the “Adjudication Determination”). Amongst other things, it was adjudicated that the Judgment Debtor shall pay to the Judgment Creditor the sum of S$84,321.01, interest on the said sum at the rate of 5.33% per annum from 11 November 2016 until full payment, and adjudication costs of S$8,185.50.

The Judgment Creditor sought to enforce the Adjudication Determination by way of DC/OSS 195 of 2016 and obtained an order-in-terms accordingly. The order was served on the Judgment Debtor on 2 December 2016. However, the Judgment Debtor did not make payment under the said order.

On 22 December 2016, the Judgment Creditor filed a garnishee application (the “1st Garnishee Application”) against the bank account of the Judgment Debtor maintained with the Garnishee. However, the Judgment Creditor only managed to garnish a sum of S$2,356.12 under the 1st Garnishee Application.

On 10 January 2017, the Judgment Creditor discovered that the Judgment Debtor was going to receive a substantial payment of a few hundred thousand dollars from a company known as Heng Guan Food Industrial Pte Ltd (“Heng Guan”). A garnishee application was thus filed on 16 January 2017 by the Judgment Creditor against the debt allegedly owed by Heng Guan to the Judgment Debtor (the “2nd Garnishee Application”).

Unsure if the Judgment Debtor had already received payment from Heng Guan and deposited the same into its bank account with the Garnishee, the Judgment Creditor simultaneously filed a garnishee application against the Garnishee on the same day (i.e., on 16 January 2017) (the “3rd Garnishee Application”).

On 26 January 2017, the Garnishee’s solicitors, KhattarWong LLP (“KW”), wrote to inform the Judgment Creditor’s solicitors, Lumen Law Corporation (“LLC”), that the Garnishee had “attached a sum of S$94,000.00 being the amount due to the Judgment Debtor”. KW also requested LLC to mention on their behalf at the show cause hearing. LLC agreed to do so.

Following the Garnishee’s confirmation that there was S$94,000 available for attachment, the Judgment Creditor took steps to discharge the provisional garnishee order obtained against Heng Guan. The provisional garnishee order was discharged on 6 February 2017.

At the show cause hearing for the 3rd Garnishee Application on 14 February 2017, the Judgment Creditor obtained the Final Order. The Judgment Creditor served the Final Order on the Garnishee on 15 February 2017. The Final Order states as follows:-

It is ordered that the said Garnishees (after deducting therefrom $150.00 for their costs of this application) do forthwith pay to the said Applicants $93,850.00 the debt due from the Garnishees to the Respondents. And that the sum of $750.00 plus reasonable disbursements of $215.08 the costs of the Applicants of this application be added to the Judgment debt and retained out of the money recovered by the Applicants under this Order and in priority to the amount of the Judgment debt.

On 23 February 2017, KW contacted LLC to inform that the Garnishee had made a mistake and that there was actually no funds in the UOB account due for attachment. KW also indicated their client’s intention to file an application to set aside the Final Order to which LLC expressed doubts as to whether the court had any jurisdiction or power to do so.

On 8 March 2017, LLC wrote to KW for payment of the attached sums under the Final Order. LLC also sought to explain the position taken by the Judgment Creditor that the Final Order could not be set aside. The relevant extract of the letter states as follows:-

With regards to the payment of the sum of $93,850.00, our clients are of the view that the Final Garnishee Order cannot be set aside as: (a) the Court is already functus once the Final Garnishee Order is made and/or perfected; and/or (b) our clients had acted and relied on your clients’ representation (that their second Garnishee application was successful) to their detriment.

Against this backdrop, the Garnishee filed this application on 10 March 2017 to set aside the Final Order.

My decision

On 26 April 2017, I directed parties to tender further submissions on two discrete issues, namely:- Whether the Final Order is a consent order; and If the Final Order is a consent order, whether it can be set aside on the ground of mistake?

I had done so because the Final Order was not expressed to be a “Consent Order”. Yet, in the Judgment Creditor’s written submissions dated 17 April 2017 (the “JC’s 1st Submissions”), the Judgment Creditor stated that the “Final Garnishee Order was akin to a consent order”. In my view, whether or not the Final Order was a consent order could possibly make a difference as this would afford the Garnishee another possible avenue for setting aside the Final Order. I thus invited parties to further submit on the same.

At law, a distinction is drawn between “a consent order of a “no objection” kind” and one which is of a “binding contract type”: see Wiltopps (Asia) Ltd v Drew & Napier and another [1999] 1 SLR(R) 252 at [18] (“Wiltopps”); Bakery Mart Pte Ltd v Ng Wei Teck Michael and others [2005] 1 SLR(R) 28 at [13] (“Bakery Mart”); Wellmix Organics (International) Pte Ltd v Lau Yu Man [2006] 2 SLR(R) 117 (“Wellmix”); Poh Huat Heng Corp Pte Ltd and others v Hafizul Islam Kofil Uddin [2012] 3 SLR 1003 (“Poh Huat Heng”); Sentosa Building Construction Pte Ltd v DJ Builders & Contractors Pte Ltd [2015] SGHCR 18 (“Sentosa Building Construction”). In Sentosa Building Construction, the learned Assistant Registrar Colin Seow referred to the “no objection” type of consent order and the “binding contract” type of consent order as “uncontested consent order” and “contractual consent order” respectively. I find this terminology convenient and adopt the same herein.

Parties do not agree on whether the Final Order is an uncontested consent order or a contractual consent order. The Judgment Creditor’s position appears to be that the Final Order was a contractual consent order because, apart from the attachment of the sum of S$94,000, there was agreement on the Garnishee’s claim for costs of the 3rd Garnishee Application and for the solicitor of the Judgment Creditor to mention on behalf of the Garnishee at the show cause hearing on 14 February 2017.

The Garnishee’s position is that the Final Order was an uncontested consent order. It was submitted that the Garnishee did not consent to any of the orders made. Rather, its response to the Judgment Creditor on 26 January 2017 was “more of in compliance with the Garnishee Order to Show Cause”.

In my view, the Final Order was clearly an uncontested consent order as it was not obtained on the back of a contract or agreement between the parties. In relation to the attachment of S$94,000, as a provisional order had been made for the same, the Garnishee had to comply with the order if there was a debt due from it to the Judgment Debtor. If the debt was in dispute, it was for the Garnishee to then show cause as to why the order should not be made final. Hence, I agree that the Garnishee attached the sum of S$94,000 in compliance with the provisional order. There was no agreement to be reached between the parties insofar as the attachment of the sum was concerned. As regards the costs of S$150.00, the Garnishee was, in fact, entitled to the same pursuant to paragraph 4(a), Part III of Appendix 2 of the Rules of Court. There was no basis for the Judgment Creditor to assert that it had “agreed” to the Garnishee’s costs. Lastly, I cannot see how the “agreement” for Mr. Chia to mention on behalf of the Garnishee makes any difference. This had no bearing on what was in issue between the parties.

Notwithstanding that the Garnishee took the position that the Final Order was an uncontested consent order, it went on to argue that the Final Order should be set aside on the ground of mutual mistake, as both parties laboured under the mistaken view that there was a debt due from the Garnishee to the Judgment Creditor. I do not agree.

The general principle is that the court will not interfere to set aside a consent judgment or order after it has been made and perfected otherwise than in a fresh action brought to set aside such judgment on any of the grounds upon which an agreement can be set aside: see Wiltopps at [27]; Bakery Mart at [11]. The court retains a residual discretion to vary or set aside the terms of a contractual consent order where this was necessary to prevent injustice: see Airtrust (Singapore) Pte Ltd v Kao Chai-Chau Linda [2014] 2 SLR 693 at [22] (“Airtrust”).

Hence, while mutual mistake could be a ground for vitiating a contract thereby providing the basis for setting aside a contractual consent order, this would not apply to the present application to set aside the Final Order, which is an uncontested consent order.

In the context of setting aside an uncontested consent order, the principles to be applied appear to be less clear....