PT Selecta Bestama v Sin Huat Huat Marine Transportation Pte Ltd

• Jurisdiction: Singapore
• Judge: Nicholas Poon AR
• Judgment Date: 30 July 2015
• Neutral Citation: [2015] SGHCR 16
• Court: High Court (Singapore)
• Docket Number: Adm No 135 of 2014 (Summons No 1088 of 2015)
• Published date: 06 August 2015
• Year: 2015
• Hearing Date: 05 May 2015,23 June 2015,22 July 2015,20 April 2015
• Plaintiff Counsel: Jason Tan Hin Wa (Asia Ascent Law Corporation)
• Defendant Counsel: Michael Chia Peng Chuang and Darius Lee (Legal Solutions LLC)
• Subject Matter: Civil procedure,setting aside default judgment,stay of proceedings
• Citation: [2015] SGHCR 16

Nicholas Poon AR: Introduction

The main action concerns a dispute over the payment of the contract price under two alleged contracts for the construction of two barges (the “Contracts”). The Defendant’s application before me, Summons No 1088 of 2015, is for two reliefs.

The first is to set aside a judgment that was entered in default of entry of appearance by the Defendant, on the ground that there are issues to be tried. The second relief is for a stay of further court proceedings, if the default judgment is set aside, on the ground that the parties had agreed, by virtue of an exclusive jurisdiction agreement in the Contracts, to submit their disputes to the court of Batam, Indonesia.

Having considered the parties’ affidavit evidence and submissions, I set aside the default judgment, albeit on condition that the Defendant pays into court $173,500, which is the sum of liquidated damages awarded to the Plaintiff under the default judgment. I make no order in relation to the stay application.

The salient facts

The Plaintiff, an Indonesian company, is in the business of building barges. The Defendant is a Singapore company which operates barges. Its principal director is one Mr Low.

Sometime in 2013, Mr Low met two representatives of the Plaintiff, one Mr Lynn and one Ms Rina. This was the first of several meetings at Mr Low’s office in Singapore. The purpose of these meetings was, broadly speaking, to discuss the possibility of the Defendant engaging the Plaintiff to construct barges. What happened thereafter is hotly disputed.

The Plaintiff’s version of events

According to Mr Lynn who was the only representative of the Plaintiff to give evidence, the parties came to an in-principle oral agreement in one of these meetings for the construction of two barges at the price of $1.33m per barge. Subsequently, Mr Lynn drew up more than 10 different draft contracts, signed and dated each of them 20 September 2013, and had these draft contracts “delivered” to Mr Low for his consideration and signature. It is not clear what the mode of delivery was. Mr Lynn claimed that Mr Low had asked for these additional draft options because he was interested in ordering more barges.

The payment schedule in all the draft contracts provides that the contract price shall be payable in three instalments: 20% upon signing of the contract; another 20% upon laying of the keel and erection of the bottom steel plate; and the remaining 60% upon completion of construction of the vessel and vessel documents but before signing of the protocol of acceptance and delivery.

Mr Low, Mr Lynn and Ms Rina then met on 25 September 2013 at Mr Low’s office. It was at this meeting that Mr Low apparently signalled his intention to proceed with the in-principle agreement for the two barges by signing and returning the two Contracts to Mr Lynn.

The Defendant’s version of events

The Defendant’s version, as put forward by Mr Low, is substantially different. He claims that the first time the parties had any sort of agreement was at the 25 September 2013 meeting. Prior to that, Mr Lynn had merely sent him quotations for barges of different specifications and prices. Mr Low said that he told Mr Lynn at the meeting that the Defendant was only interested in purchasing one of the barges, but that the listed price of $1.49m for that barge was too steep. Mr Low also claimed to have said that the payment schedule was unattractive as the Defendant did not have sufficient funds at that time.

In response, Mr Lynn purportedly offered three concessions. First, the Plaintiff would sell the barge to the Defendant for a reduced price of $1.33m. Second, the Defendant only needed to pay the 20% deposit upon signing of the contract, with the balance 80% payable upon delivery. Third, if the Defendant did not pay the deposit, the contract would cease to be binding; neither party would be liable to perform any of the obligations in the contract. Mr Low said he accepted Mr Lynn’s counter-proposal.

According to Mr Low, it was pursuant to this agreement – which he calls the Oral Agreement – that Mr Lynn then presented him with a large number of documents to sign. (These are the draft contracts in Mr Lynn’s version.) Mr Low proceeded to sign a number of those documents which turned out to be the Contracts, on the back of Mr Lynn’s alleged representation that those documents formalised the Oral Agreement, and nothing more. It is important to note that the Defendant has expressly disclaimed reliance on the doctrine of non est factum. In other words, the Defendant is not taking the position that there is a “radical difference” between what Mr Low signed and what he thought he was signing (for a general understanding of the doctrine, see Andrew Phang & Goh Yihan, Contract Law in Singapore (Wolter Kluwers, 2012) at para 458).

After the Contracts were signed

The Plaintiff then commenced construction of the two barges under the Contracts, notwithstanding that the Defendant did not pay the deposit. It is also common ground that the Plaintiff tendered invoices to the Defendant in October and November 2013 for the 20% deposit and 20% progress payment, all of which were ignored by the Defendant.

The Plaintiff accordingly commenced this action for liquidated damages, as well as damages for consequential loss arising from the Defendant’s failure to pay the contract price due under the Contracts.

The parties’ respective submissions

The arguments below are those which I consider to be principal and material to my decision.

Setting aside of default judgment

In relation to the prayer to set aside the default judgment, the Defendant’s case rests principally on two planks. First, the Defendant is not liable for the Plaintiff’s losses because it was misled into signing the Contracts; at all times, it was the Oral Agreement which the parties had agreed to be bound by. Second, the Plaintiff’s claim for liquidated damages is unsustainable because, amongst other things, the clause in the Contracts which entitles the Plaintiff to claim for liquidated damages is unenforceable.

The Plaintiff, on the other hand, submits that there is no defence to the claim, given that Mr Low has acknowledged signing the Contracts. The Plaintiff denies that the parties’ agreement is captured in the Oral Agreement, or that Mr Lynn had represented that the Contracts’ sole purpose was to formalise the Oral Agreement. The Plaintiff further denies that the liquidated damages clause is unenforceable.

Stay of proceedings

As to the prayer for a stay of the proceedings, the Defendant submits that the Plaintiff is unable to satisfy the “strong cause” test in The Jian He [1999] 3 SLR(R) 432, in that there are no exceptional circumstances which justify disregarding the plain effect of the exclusive jurisdiction agreement.

The Plaintiff’s response consists of two arguments in the main. First, if the Defendant denies being bound by the Contracts, it cannot avail itself of the exclusive jurisdiction agreement contained in the Contracts. Second, the Defendant had waived its right to rely on the exclusive jurisdiction agreement because it had affirmed the Singapore court’s jurisdiction over this matter by taking out a Notice to Produce under O 24 r 10 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”), which is essentially a request to the Plaintiff to produce certain documents referred to in the Statement of Claim.

My decision Setting aside of default judgment

The law on setting aside of default judgments pursuant to O 13 r 8 of the Rules of Court is very clear and settled. In the leading case of Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] 4 SLR(R) 907 (“Mercurine”), the Court of Appeal stated (at [60]):

[I]n deciding whether to set aside a regular default judgment, the question for the court is whether the defendant can establish a prima facie defence in the sense of showing that there are triable or arguable issues. It is, in our view, rather illogical to hold that the test for setting aside a regular default judgment should be any stricter than that for obtaining leave to defend in an O 14 application.

As for what constitutes a “triable issue”, reference may be made to Evans v Bartlam [1937] AC 473, in which Lord Wright opined that a triable issue exists where there are “merits to [the defence] which the Court should pay heed”. In the context of an O 14 application, the triable issue test is satisfied if “a defendant shows that he has a fair case for defence, or reasonable grounds for setting up a defence, or even a fair probability that he has a bona fide defence”: Habibullah Mohamed Yousuff v Indian Bank [1999] SLR(R) 880 at [21].

Hence, the threshold for demonstrating the existence of triable issues is not high. Even so, Mr Low’s evidence in my view falls short of this minimum standard because his version of events is inherently incredible. I list just three of the more serious difficulties that I had with his account.

Veracity of factual assertions

The first has to do with his claim that he was handed the Contracts at the very meeting on 25 September 2013. It is critical to note that the listed price of the barges in the Contracts was $1.33m, the exact same discounted price that Mr Low said Mr Lynn had offered for the first time at that meeting. If Mr Low is to be believed, it would mean that Mr Lynn went into the meeting with a view to lowering the prices for the two barges, notwithstanding that Mr Low had not yet told him that the Defendant was short of funds and found the previous quotations too expensive.

Moreover, Mr Lynn had not gone into the meeting with multiple contracts for the same barge at different prices hoping that Mr Low would sign the contract with the price which appealed to him most. The draft contracts were for different types of barges. Again, if Mr Low is to be believed, Mr Lynn went into...