Sia Leng Yuen also known as Xie Ning Yun v Ko Chun Shun Johnson (No 2)

• Jurisdiction: Singapore
• Judgment Date: 30 August 2003
• Date: 30 August 2003
• Docket Number: Originating Summons Bankruptcy (Registrar's Appeal No 233 of 2003)
• Court: High Court (Singapore)

Sia Leng Yuen

Plaintiff

and

Ko Chun Shun Johnson

Defendant

[2003] SGHC 194

MPH Rubin J

Originating Summons Bankruptcy No 39 of 2003 (Registrar's Appeal No 233 of 2003)

High Court

Civil Procedure–Costs–Principles–Whether successful defendant should have his taxed costs held in escrow, until determination of fresh set of proceedings against him by same plaintiff, based on same facts

Johnson Ko Chun Shun (“Ko”) loaned US$2m to Sia Leng Yuen (“Sia”). Sia failed to honour the loan repayment terms. Ko issued a statutory demand for the full amount of the debt (“the first statutory demand”) on 31 August 2001. The first statutory demand was set aside and Ko was also ordered to pay Sia's costs. The Court of Appeal dismissed Ko's appeal and ordered, inter alia, that he pay Sia forthwith the costs of the appeal.

Before making any payment of costs of the failed proceedings, Ko issued a fresh statutory demand against Sia. Sia applied for a stay of the fresh proceedings until Ko had paid all the costs arising from the first statutory demand. The assistant registrar there ordered that the action be stayed unless Sia paid all previous costs and the costs of that day's proceedings to Ko's solicitor, to be held in escrow until the bankruptcy proceedings were completed.

Sia appealed against the assistant registrar's inclusion of the proviso that the costs be held in escrow until the completion of the bankruptcy proceedings.

Held, allowing the appeal:

(1) The imposition of the escrow provision was not in accord with the current of authority: at [11].

(2) The court would only postpone the reimbursement of a successful party's costs if there were exceptional circumstances warranting such a postponement: at [18].

(3) Apart from a general statement that the money would not be recoverable if it were to be paid out, no other factors were brought to the court's attention to justify the imposition of the escrow provision: at [18].

Hines v Birkbeck College (No 2) [1992] Ch 33; [1991] 3 WLR 557 (refd)

M'Cabe (Pauper) v The Governor and Company of the Bank of Ireland (1889) 14 App Cas 413 (refd)

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 2 SLR (R) 31; [2002] 3 SLR 594 (folld)

Bankruptcy Act (Cap 20, 2000 Rev Ed) s 62

Bankruptcy Rules (Cap 20, R 1, 1996 Rev Ed) rr 94 (5), 96 (6), 98 (2)

Prakash Mulani (M & A Law Corporation) for the appellant

Marc Wang (John, Tan & Chan) for the respondent.

MPH Rubin J

Issue

1 In this appeal, the only issue for determination is whether a successful defendant in a set of legal proceedings should have his taxed costs held in escrow, until the determination of a second set of proceedings against him by the same plaintiff, based on the same facts. The facts that gave rise to this issue can be summarised as follows.

Brief facts

2 Asum of US$2m was loaned by Johnson Ko Chun Shun (“Ko”) to Sia Leng Yuen also known as Xie Ning Yun (“Sia”), upon the latter's request. This loan was evidenced by a promissory note dated 4 January 2001. The security for the loan was said to be 50 membership certificates in a certain country club known as Blue Canyon Country Club. This security was provided by Sia.

3 In so far as is material, cl 3 of the said promissory note provided, amongst other things, as follows:

The Debtor also HEREBY PLEDGE [sic] as collateral security for the whole debt, fifty golf lifetime memberships of Blue Canyon Country Club together with Membership Certificates for the sum of United States Dollars 2,000,000 (the “Security”) as detailed in Schedule 1 annexed. In the event of default of any single instalment payment, the Debtor HEREBY AUTHORISE [sic] the said Mr Ko and/or CIC and/or any nominated third party forthwith either by auction private treaty transfer or otherwise to sell or dispose of the said Security without further delay. Proceeds of such sale or disposal shall be applied to reduce the said sum of United States Dollars 2,000,000 and interest thereon at the rate of 15 percent per annum calculated from the date of default rendering to Mr Sia any surplus which may be forthcoming from such sale and disposal. …

4 There was apparently a default on the part of Sia in honouring the loan repayment terms. As a result, Ko proceeded to issue a statutory demand under s 62 of the Bankruptcy Act (Cap 20), dated 31 August 2001 (“the first statutory demand”) against Sia for the full amount of the debt plus interest, totalling US$2,197,260.27. The said first statutory demand did not include any reference to the value of the security provided by Sia.

5 Sia then applied to the court in Originating Summons No 600118 of 2001 to set aside the said first statutory demand, contending that the said demand did not comply with rr 94 (5), 94 (6), 98 (2) (c), (d) and (e) of the Bankruptcy Rules (Cap 20, R 1). The relevant segments of rr 94 and 98 of the Bankruptcy Rules are reproduced below:

1. 94. – (1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditor's behalf.

2. (2) The statutory demand...