SIC College of Business and Technology Pte Ltd v Yeo Poh Siah and others

• Jurisdiction: Singapore
• Judge: Edmund Leow JC
• Judgment Date: 18 May 2015
• Neutral Citation: [2015] SGHC 133
• Court: High Court (Singapore)
• Docket Number: Suit No 1045 of 2012
• Year: 2015
• Published date: 26 January 2016
• Hearing Date: 17 November 2014,10 September 2014,09 September 2014
• Plaintiff Counsel: Kannappan s/o Karuppan Chettiar
• Defendant Counsel: Jordan Tan and Keith Han (Cavenagh Law LLP)
• Subject Matter: Civil Procedure,costs,Evidence,hearsay
• Citation: [2015] SGHC 133

Edmund Leow JC: Introduction

This case involved a claim and a counter-claim. The plaintiff’s claim against the defendants (“the main claim”) had been stayed until it furnished security for costs. At the close of the two-day trial solely on the counter-claim on 9-10 September 2014, I dismissed the main claim as the plaintiff had failed to provide the required security. I delivered my oral judgment on 2 February 2015. I found the plaintiff liable to the first defendant for $218,000 on the counter-claim. I also ordered the costs for the main claim and the counter-claim to be borne jointly and severally by the plaintiff, Mr Kannappan s/o Karuppan Chettiar (“Mr Chettiar”) and his wife, Ms Cenobia Majella (“Ms Majella”), both of whom were the plaintiff’s shareholders.¹ As the plaintiff has appealed, I set out my grounds below.

Background The main claim and counter-claim

The plaintiff was a company in the private education industry. At the material time, the first three defendants were its employees; the first defendant was also a director. The first three defendants were also directors of the fourth defendant,² which was a company that had contracted to operate the plaintiff’s business under licensing arrangements.

While the main claim was stayed and dismissed without being heard, a flavour of the allegations brought by the plaintiff provides helpful context. A significant aspect of the main claim was that the first defendant had concealed his interest in the fourth defendant from the plaintiff, which he owed duties to. The plaintiff alleged that the first three defendants were parties to a scheme to enrich the fourth defendant at the plaintiff’s expense. In particular, it alleged that the first defendant had made a series of unauthorised and fictitious payments from the plaintiff to the fourth defendant. The alleged instances of misappropriation – between 30 October 2009 and 21 October 2010 – were cloaked as outsourcing fees, consultancy fees and repayments of advances.³ The plaintiff contended, inter alia, that the first defendant had breached his fiduciary duties. The defendants responded in their defence that they were allowed to remove monies under the various licensing arrangements.

The defendants also launched a counter-claim,⁴ alleging that at all material times, the first defendant had been making advances to the plaintiff on a running account basis to supplement the cash flow of the plaintiff. By running account, the first defendant meant an “ongoing account” of deposits and withdrawals between himself and the plaintiff.⁵ The relevant period for this running account was between 30 October 2009 and 8 October 2010. This substantially overlapped with the time period of the alleged misappropriation in [3] above. The first defendant alleged a total of 18 transactions during this period, being 13 advances received by the plaintiff and five repayments from the plaintiff. As of 8 October 2010, there was allegedly an outstanding balance in favour of the first defendant for a sum of $244,844.⁶

The plaintiff’s pleaded defence to the counter-claim⁷ was that the plaintiff had no need and/or reason to receive any cash advances from the first defendant as it had its own finances to support itself. It also asserted that the first defendant had never made any advances to the plaintiff but instead, used the plaintiff’s accounting books to create fictitious entries.

The plaintiff’s failure to provide security for costs

The defendants filed Summons 3367 of 2014 for security for costs. On 12 August 2014, the assistant registrar ordered that the plaintiff furnish security for costs in favour of the defendants in the sum of $75,000 within 14 days, or by 26 August 2014. The main claim was to be stayed until the security was provided. There was no appeal against this order. At a pre-trial conference on 18 August 2014, I told the plaintiff, who was still represented by a lawyer then, that security must be provided by the 26 August 2014 deadline. The deadline came and went, but no security was provided. At a pre-trial conference on 2 September 2014, the plaintiff told the assistant registrar that he needed more time to raise the security and would raise the funds in due course. The defendants gave notice to the plaintiff that they would continue to seek judgment of the counter-claim and apply for the plaintiff’s claim to be dismissed for failure to pay security. They also said that they would seek personal costs from Mr Chettiar and Ms Majella at trial. The trial started on 9 September 2014 after I acceded to the request of Mr Chettiar – who had a law degree and had taught law – to represent the plaintiff. However, he gave me no good reason to grant him until 30 September 2014 to furnish security for costs⁸. I thus heard the parties on the counter-claim. At the end of the trial, I remained unconvinced of Mr Chettiar’s ability to make good on the security even with more time. He had provided little more than mere assurances. I therefore dismissed the plaintiff’s main claim on account of its default to furnish security for costs.⁹

My decision to dismiss the main claim which had been stayed was not made lightly. The main claim and the counter-claim were clearly delineated in the pleadings and the affidavits, but the plaintiff’s prospects in the counter-claim obviously depended in some degree on its ability to prove the facts-in-issue in the main claim. The power to dismiss an action for default in complying with an order for security derives from the inherent jurisdiction of the court (Singapore Civil Procedure 2015 vol I (GP Selvam gen ed) (Sweet & Maxwell Asia, 2014) at para 23/3/37). I recognised the plaintiff’s concern that the defendants’ application for security for costs was made late in the pre-trial phase. However, the plaintiff was in clear disregard of the time limit prescribed by the court. I was also unconvinced that there was any reasonable prospect that the security would be paid. There were two circumstances in which courts have held that the inherent jurisdiction is exercisable: Speed Up Holdings Limited v Gough & Co. (Handly) Ltd [1986] FSR 330 at 334-335. In that case, the English High Court also suggested that a particular circumstance for consideration was whether the continued existence of the proceedings was “operating to the prejudice of the defendant”. In this regard, I also gave some weight to the defendants’ submissions that the proceedings should not continue to hang over their heads on the plaintiff’s promises to make good on the security, which would mean vacating the trial.

Issues

As the plaintiff’s claim had been dismissed, I was only concerned with whether the first defendant could discharge its legal burden in regard to the counter-claim (see above at [4]-[5]). A second issue was whether the costs of the main claim and the counter-claim should be borne jointly and severally by the plaintiff, Mr Chettiar and Ms Majella.

My decision on the counter-claim

The 18 transactions in the running account that allegedly showed a balance of $244,844 owing to the first defendant came from the plaintiff’s own general ledger, under a section titled “Advancement from Ken Yeo” (as the first defendant is known).¹⁰ A two-page copy of the ledger was exhibited in support of the 18 transactions. The purported entries on the ledger are partially reproduced, with serial numbers added and the bank account number redacted:

No	Date	Description	Debit	Credit	Balance
		Balance B/F			0.00
1	01/04/2010	Advance from Ken		75,000.00	(75,000.00)
2	05/05/2010	Short term advancement from Ken Yeo		6,000.00	(81,000.00)
3	05/05/2010	SCB Current A/C 13-1-XXXXXX-7		2,844.00	(83,844.00)
4	13/05/2010	Repayment of advancement from Ken Yeo	6,000.00		(77,844.00)
5	18/05/2010	SCB Current A/C 13-1-XXXXXX-7		8,000.00	(85,844.00)
6	20/05/2010	SCB Current A/C 13-1-XXXXXX-7		12,000.00	(97,844.00)
7	04/06/2010	SCB Current A/C 13-1-XXXXXX-7		12,000.00	(109,844.00)
8	09/07/2010	SCB Current A/C 13-1-XXXXXX-7		17,500.00	(127,344.00)
9	09/07/2010	Advance from Ken		13,000.00	(140,344.00)
10	20/07/2010	Advance from Ken		5,000.00	(145,344.00)
11	20/07/2010	Advance from Ken		19,000.00	(164,344.00)
12	06/08/2010	Repayment of advancement from Ken	13,500.00		(150,844.00)
13	06/09/2010	Loan from Ken		30,000.00	(180,844.00)
14	08/09/2010	Advance from Ken		107,000.00	(287,844.00)
15	17/09/2010	Repayment for advancement to Ken	30,000.00		(257,844.00)
16	22/09/2010	Repayment of advancement from Ken	13,000.00		(244,844.00)
17	08/10/2010	Advance from Ken		3,000.00	(247,844.00)
18	08/10/2010	Repayment of advancement from Ken	3,000.00		(244,844.00)
			65,500.00	310,344.00	(244,844.00)

The first defendant explained how he came into possession of the ledger, which had been printed out from the plaintiff’s accounting software in the plaintiff’s office on 7 January 2011.¹¹ The ledger was printed out in anticipation of disputes arising from the licensing arrangements to operate the plaintiff’s business.¹² The second defendant had kept the print-out and provided it to the first defendant for the purpose of filing his affidavit.¹³ The first defendant testified that the records were reliable as they had been printed out from the system. He claimed that he had authorised the 18 transactions by signing on the plaintiff’s vouchers, although he admitted that he did not have the vouchers...