SK Lateral Rubber & Plastic Technologies (Suzhou) Company Ltd v Lateral Solutions Pte Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeRoger Giles IJ
Judgment Date17 April 2020
Date17 April 2020
Docket NumberSuit No 6 of 2019 (Summons No 13 of 2020)

[2020] SGHC(I) 9

Singapore International Commercial Court

Roger Giles IJ

Suit No 6 of 2019 (Summons No 13 of 2020)

SK Lateral Rubber & Plastic Technologies (Suzhou) Co Ltd
and
Lateral Solutions Pte Ltd

Jimmy Yim SC, Kevin Lee, Eunice LauandHo Wah Jiang (Drew & Napier LLC) for the plaintiff;

Tan Chuan Thye SC, Disa Sim, Jared Kok, Chiang Yuan BoandJames Kwong (Rajah & Tann Singapore LLP) for the defendant.

Case(s) referred to

Amer Hoseen Mohammed Revai v Singapore Airlines Ltd [1994] 3 SLR(R) 290; [1995] 1 SLR 77 (folld)

B2C2 Ltd v Quoine Pte Ltd [2018] 5 SLR 105 (folld)

Creative Elegance (M) Sdn Bhd v Puay Kim Seng [1999] 1 SLR(R) 112; [1999] SLR 600 (refd)

Jurong Town Corp v Wishing Star Ltd [2004] 2 SLR(R) 427; [2004] 2 SLR 427 (folld)

Ong Jane Rebecca v Pricewaterhousecoopers [2009] 2 SLR(R) 796; [2009] 2 SLR 796 (folld)

P T Muliakeramik Indahraya TBK v Nam Huat Tiling & Panelling Co Pte Ltd [2006] SGHC 154 (refd)

Sembawang Engineering Pte Ltd v Priser Asia Engineering Pte Ltd [1992] 2 SLR(R) 358; [1992] 2 SLR 806 (refd)

Tjong Very Sumitomo v Chan Sing En [2011] 2 SLR 360 (refd)

Legislation referred to

Companies Act (Cap 50, 2006 Rev Ed) s 388

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 23, O 23 r 1(1), O 24, O 110 r 45, O 110 r 45(1A), O 110 r 45(1B), O 110 r 45(2), O 110 r 45(2A)

Civil Procedure — Costs — Security — Seeking security for costs against foreign company — Late pleading of defence — Economic effect of pandemic stifling claim — Economic effect of pandemic causing financial stringency justifying security for costs — Overlap of costs in defending against claim and prosecuting counterclaim — Memorandum of Guidance between two jurisdictions providing confidence in ability to enforce judgments overseas — Whether security for costs should be ordered — Order 110 Rules of Court (Cap 322, R 5, 2014 Rev Ed)

Facts

SK Lateral Rubber & Plastic Technologies (Suzhou) Co Ltd (“the plaintiff”) is a company incorporated in the People's Republic of China. It manufactured and supplied polymer parts (“parts”) for on-sale by Lateral Solutions Pte Ltd (“the defendant”). The defendant is a company incorporated in Singapore. Their business relationship began in 2011 but had deteriorated by 2017. The plaintiff commenced proceedings in the High Court on 2 October 2017 seeking payment for equipment purchased, tooling procured and other expenses incurred in the manufacture of parts, and for parts themselves.

The defendant contended that it had only been obliged to make payment when its cash flow allowed it (“the cash flow defence”). In the defence proffered until the fifth amendment the defendant had maintained that payment was not due until it had been paid by its customer (“the pay when paid defence”). As to payment for tooling, it was said that payment was not due until the defendant's customer had agreed to and ultimately paid for the tooling, or until after it had been paid for the parts produced with the tooling. The plaintiff's claims for equipment costs and other miscellaneous expenses for the manufacture of the parts were denied.

The defendant counterclaimed that the plaintiff (a) owed it money for casings for which it (the defendant) had paid on behalf of the plaintiff; (b) was holding on to items of equipment which rightfully belonged to the defendant; (c) had wrongfully ceased supply of parts; and (d) had supplied defective parts but had refused to repay their cost.

In January 2019, the plaintiff's application for summary judgment (“the Summary Judgment Application”) was dismissed by Kannan Ramesh J on the basis that the defendant had a defence of set-off against SKL's claim, but with remarks doubting the then pay when paid defence. In December 2019, the proceedings were transferred to the Singapore International Commercial Court (“SICC”). There was no order or condition relating to security for costs.

At an earlier time it was ordered by consent that $30,000 be provided as security for the defendant's costs until the conclusion of discovery. The defendant applied for further security to the conclusion of the trial.

Held, dismissing the application:

(1) The defendant was not entitled to further security for costs simply because the plaintiff had earlier consented to providing security until the conclusion of discovery. It remained necessary to establish the power to order security for costs, and then to consider the exercise of the discretion to grant security: at [18].

(2) The power to order security for costs was established as the plaintiff was a party ordinarily resident out of the jurisdiction. Since the proceedings were not commenced in the SICC, it was notionally added to the conditions in O 110 r 45(1B) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) that the principles applicable in the exercise of the discretion to order security for costs were those established under O 23 of the Rules of Court. This was because the plaintiff had commenced suit in the High Court and the defendant would ordinarily have been entitled to take the plaintiff's place of residence as a basis to establish the court's power to order security for costs. The defendant was not to be deprived of that benefit simply by virtue of the transfer: at [28].

(3) The question of whether to exercise the discretion to order security for costs involved regard to (a) the fact that the plaintiff was ordinarily out of jurisdiction; (b) the relative strength of the party's cases; (c) the possible economic effect of the COVID-19 pandemic; and (d) the overlap of the costs incurred by the defendant in defending the claim and in prosecuting the counterclaim: at [33], [37], [41] and [50].

(4) Though the plaintiff was ordinarily out of the jurisdiction, the Memorandum of Guidance between the Supreme People's Court of the People's Republic of China and the Supreme Court of Singapore (“the Memorandum”) gave assistance to and confidence in the ability to enforce a Singaporean judgment in China. However, the Memorandum did not entirely erase all inconvenience, expense and delay in taking steps in a foreign legal environment. This factor in favour of ordering security was reduced in weight: at [33].

(5) As to the relative strength of the party's cases, the plaintiff had the stronger case for the purposes of this application. The cash flow defence was proffered late, and was questionable as it was unusual for a commercial agreement, valued at millions of dollars, to only require payment when the debtor was able to pay. Similar doubts to those voiced by Kannan Ramesh J in the Summary Judgment Application were raised: at [37].

(6) The evidence of the COVID-19 pandemic's possible economic impact was only in general terms, without evidence of the plaintiff's trading or financial circumstances. As such, it could not support the plaintiff's assertion that an order for security for costs, married with the economic effects of the COVID-19 pandemic, would stifle its claim. In a similar vein, the defendant's suggestion that the COVID-19 pandemic might create cash flow issues for the plaintiff, as a factor in favour of ordering security, was unsubstantiated: at [39] to [44].

(7) The defendant would incur additional costs in defending against the claim over its costs in prosecution of the counterclaim. However, all the claims arose from one course of dealings over some years in a corporate supply relationship, with an overlap of personal relationships. The same witnesses called in defence against the plaintiff's claims could be expected give evidence in support of the defendant's counterclaims: at [50].

(8) It was not just to order security for costs, whether to the end of the trial or in a lesser amount reflecting the additional costs abovementioned: at [52].

17 April 2020

Judgment reserved.

Roger Giles IJ:

1 The defendant/counterclaimant, Lateral Solutions Pte Ltd (“Lateral”), applies for an order that the plaintiff/counterdefendant, SK Lateral Rubber & Plastic Technologies (Suzhou) Co Ltd (“SKL”), furnish security for its costs to the end of the trial. For the reasons which follow, the application should be dismissed.

Facts
The parties

2 SKL is a company established under the laws of the People's Republic of China. Its business...

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1 cases
  • Larpin, Christian Alfred v Kaikhushru Shiavax Nargolwala
    • Singapore
    • High Court (Singapore)
    • 24 November 2020
    ...[2007] 1 SLR(R) 1017; [2007] 1 SLR 1017 (refd) SK Lateral Rubber & Plastic Technologies (Suzhou) Co Ltd v Lateral Solutions Pte Ltd [2020] 4 SLR 72 (refd) Legislation referred to Misrepresentation Act (Cap 390, 1994 Rev Ed) Reciprocal Enforcement of Foreign Judgments Act (Cap 265, 2001 ......

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