Q & M Enterprises Sdn Bhd v Poh Kiat

JudgeAndrew Phang Boon Leong JC
Judgment Date31 August 2005
Neutral Citation[2005] SGHC 155
Docket NumberSuit No 35 of 2005 (Registrar's Appeal No 75 of 2005)
Date31 August 2005
Published date01 September 2005
Plaintiff CounselLim Soo Peng (Lim Soo Peng and Co)
Citation[2005] SGHC 155
Defendant CounselTan Siak Hee (S H Tan and Associates)
CourtHigh Court (Singapore)
Subject MatterOrder 14 Rules of Court (Cap 322, R 5, 2004 Rev Ed),Applicable principles,Whether action may be stayed even where plaintiff claiming to be entitled to summary judgment,Whether considerations of international comity prevailing over possible availability of summary judgment to plaintiff,Forum non conveniens,Conflict of Laws,Natural forum,Whether action commenced in Singapore courts should be stayed on ground Malaysian courts more appropriate forum

31 August 2005

Andrew Phang Boon Leong JC:


1 The facts of the present case were simple, but they raised interesting points of law – especially with regard to the relationship between conflict of laws principles relating to the stay of actions on the one hand and those relating to the grant of summary judgments under O 14 (“O 14”) of the Rules of Court (Cap 322, Rule 5, 2004 Rev Ed) on the other.

2 In this case, the plaintiff brought an action against the defendant for payment of a sum allegedly due on a written (and personal) guarantee (“the Guarantee”) given by the latter to the former. The Guarantee was a simple and straightforward one. It was dated 24 April 2001 and reads as follows:

In consideration of you entering into a Settlement Agreement (“Settlement Agreement”) dated 24th April 2001 with Applied Components and Tools (M) Sdn Bhd (Co. No. 1955059-U) (“The Company”) by way of your letter dated 24.4.2001 to the Company and the countersigned by the Company. I HEREBY GUARANTEE the payment by the Company to you, of each of the sum stipulated in the Settlement Agreement Provided Always that the Company shall have already defaulted in its payment of not less than three (3) of the consecutive instalments set out in the Settlement Agreement.

3 The plaintiff claimed that the Guarantee had been drafted by the defendant and had been signed by the defendant at the plaintiff’s office in Singapore. However, the defendant vigorously disputed this claim, and claimed, instead, that he had signed the guarantee in Johor Baru, West Malaysia.

4 The plaintiff also asserted the following further facts (which he rather disingenuously, in my view, described in his written submissions as “not disputed”):

(a) Firstly, the plaintiff’s operations as well as assets are located in Singapore.

(b) Secondly, the plaintiff’s managing director who had dealt with the defendant in relation to the Guarantee is a Singaporean who resides in Singapore.

(c) Thirdly, the original copies of the Guarantee and settlement agreement, referred to in [2] above (“the Settlement Agreement”), as well as documents relating to the principal debt are in possession of the plaintiff in Singapore.

(d) Fourthly, the defendant is a Singaporean residing in Singapore, and his assets are also in Singapore. The plaintiff further alleged that the defendant held many directorships and was also a shareholder in many Singapore companies, as well as the managing director of a public-listed Singaporean company.

5 The defendant’s version of the facts brings some balance to the overall picture:

(a) The plaintiff is in fact a Malaysian registered company which is engaged in the business of selling and distributing industrial plating chemicals. All relevant transactions and payments were entered into in Malaysia and, hence, the defendant argued that the plaintiff could not now lift the corporate veil by arguing that its operations were in fact in Singapore and that the plaintiff company itself was a mere remittance centre for the Singapore company. The plaintiff was in fact a properly constituted private limited company incorporated in Malaysia which had commenced legal proceedings against the principal debtor, Applied Components and Tools (M) Sdn Bhd (“ACT”), without any problems (these proceedings have in fact since been concluded: see para (n) below).

(b) ACT, the principal debtor, is a manufacturing company in Malaysia.

(c) Both the plaintiff and ACT have had a long and substantial business relationship.

(d) In fact, in so far as the present proceedings are concerned, the relevant transactions between the plaintiff and ACT were entered into in Malaysia. All relevant documents are also located in Malaysia.

(e) The defendant is the group managing director of Teamsphere Limited which owned Fine Components Pte Ltd which, in turn, owned a majority of the shares in ACT. The defendant, though, was never a director of ACT. The fact that the defendant is a Singaporean residing in Singapore is, the defendant argues, insufficient, per se, as a real and substantial connecting factor in the context of the present proceedings.

(f) ACT owed the plaintiff a total of RM1,289,988 as at 1 April 2001.

(g) ACT negotiated the Settlement Agreement with the plaintiff to pay it RM1,289,988 in 18 monthly instalments, with the first payment due on 10 September 2001.

(h) The Settlement Agreement was signed by the plaintiff in Singapore and sent to ACT in Malaysia, whereupon it was signed by ACT in Malaysia. This Settlement Agreement in fact constitutes the underlying transaction upon which the defendant’s principal defences rest (see especially paras (l) and (m) below).

(i) The plaintiff requested that the defendant sign a personal guarantee for the sum stated in para (f) above. This is the Guarantee which constitutes the nub of the present proceedings. As we have seen (at [3] above), there is some dispute as to where the defendant signed the Guarantee. The defendant claims to have signed it at a coffee house in Johor Baru, West Malaysia.

(j) On 11 December 2001, Teamsphere Limited sold all its shares in Fine Components Pte Ltd to Prudent Dimension Sdn Bhd.

(k) The defendant received, on 13 February 2004, a letter from the plaintiff which claimed that ACT had failed to pay all the 18 monthly instalments due. Such alleged default occurred in Malaysia and the cause of action against the defendant, so the argument runs, therefore also arose in Malaysia.

(l) The defendant subsequently obtained, from a former executive director of ACT, documents which purported to show invoices with respect to both the above guaranteed debts as well as purchases of goods by ACT from the plaintiff after the date of the Settlement Agreement. These formed the basis for the defendant’s argument with respect to the rule in Clayton’s case (see generally [53]–[58] below) to the effect that the guaranteed debt had, applying this rule, been fully paid by ACT on 27 November 2002, and that there was therefore no basis for the present claim by the plaintiff against him.

(m) There was, according to the defendant, an alleged variation of the Settlement Agreement by the plaintiff to the detriment of the defendant. Hence, the defendant’s liability as surety will, if this allegation is true, be discharged. The defendant also claims in this regard that he had at no time consented in writing to any variation of the terms of the settlement agreement.

(n) ACT was wound up by the Malaysian High Court on 24 February 2005 and its affairs, together with the company’s documents, are now within the jurisdiction of the (Malaysian) Official Receiver.

(o) All the defendant’s witnesses (comprising personnel from ACT) and documents are in Malaysia. If the witnesses are unable or refuse to attend court, the Malaysian court, so the defendant argues, would be in a much better position to compel their attendance.

(p) There is no express choice of law clause in either the Settlement Agreement or the Guarantee. The defendant has also obtained an expert opinion from Malaysian counsel to the effect that the proceedings are governed by the Malaysian Contracts Act.

(q) An action has in fact already been commenced by the defendant against the plaintiff in the High Court of Malaysia at Kuala Lumpur seeking, inter alia, a declaration that the Guarantee ought to be avoided and/or cancelled on the ground, inter alia, of misrepresentation. The plaintiff has filed a Defence in these proceedings.

6 The learned Deputy Registrar had in fact ordered that the present proceedings commenced by the plaintiff in the Singapore courts be stayed. I affirmed this decision and dismissed the plaintiff’s appeal. The plaintiff is dissatisfied with my decision and has appealed. I now give the detailed grounds for my decision.

Forum non conveniens and stay of proceedings

The Spiliada case

7 Counsel for both parties agreed that the governing decision in the present proceedings was that of the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“the Spiliada case”).

8 The principles embodied in the Spiliada case are to be found in the following oft-cited summary by Lord Goff of Chieveley (at 476):

(a) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.

(b) [I]n general the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay … It is however of importance to remember that each party will seek to establish the existence of certain matters which will assist him in persuading the court to exercise its discretion in his favour, and that in respect of any such matter the evidential burden will rest on the party who asserts its existence. Furthermore, if the court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the plaintiff to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country.

9 It is clear beyond peradventure that the principles in the Spiliada case are now firmly part of the Singapore legal landscape. Indeed, in the Singapore Court of Appeal decision of Brinkerhoff Maritime Drilling Corp v PT Airfast Services Indonesia [1992] 2 SLR 776, Chao Hick Tin JA, delivering the judgment of the court, observed at 784, [35], as follows:

Lord Goff, who delivered the judgment of the House [in the Spiliada case], to which the other four Law Lords agreed, restated the law (and in so restating, took into account the Scottish authorities as well) which is summarized in the third cumulative supplement...

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