Sun Jin Engineering

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 21 January 2011
• Neutral Citation: [2011] SGCA 4
• Year: 2011
• Date: 21 January 2011
• Published date: 06 April 2011
• Hearing Date: 07 September 2010
• Plaintiff Counsel: A Rajandran (A Rajandran)
• Citation: [2011] SGCA 4
• Defendant Counsel: Haresh Kamdar (KhattarWong)
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 73 of 2010

Chao Hick Tin JA (delivering the judgment of the court):Introduction

This is an appeal against the decision of the High Court judge (“the Judge”), who upheld the decision of the assistant registrar (“the AR”) to grant a stay of proceedings in Suit No 379 of 2009 (“the Singapore Action”), an action commenced in Singapore by the appellant, Sun Jin Engineering Pte Ltd (“the Appellant”), against the respondent, Hwang Jae Woo (“the Respondent”). The grounds of decision of the Judge may be found at Sun Jin Engineering Pte Ltd v Hwang Jae Woo[2010] 3 SLR 684 (“the GD”).

The background

To better appreciate the circumstances giving rise to the Singapore Action, we will first set out the facts of the case. The Appellant is a company incorporated in Singapore. Its majority shareholder and director is one Seung Yong Chung (“Seung”), who is also a substantial shareholder and director of a Malaysian company known as Sun Jin Engineering (M) Sdn Bhd (“SJM”). The Respondent is a South Korean citizen who was the acting project director for projects undertaken by SJM in the Republic of Maldives (“the Maldives”). The exact legal relationship between the Appellant and the Respondent is in dispute,¹ although the Judge was tentatively of the view that the Respondent was in fact employed by the Appellant at the material time, albeit seconded to work for SJM in the Maldives (see the GD at [31]; see also [12] below). On the factual matrix of the present case, we do not see how we can disagree with this finding.

The Respondent worked in the Maldives from 27 August 2006 to 1 February 2008. When the Respondent arrived in the Maldives on 27 August 2006, he was given a letter of employment dated 15 August 2006 from SJM. The authenticity of this letter is disputed by the Appellant. During the period while the Respondent was working in the Maldives, he was the country representative, project director and project manager of SJM. It is undisputed that the directors of SJM passed a resolution on 3 May 2007 appointing the Respondent as its country representative in the Maldives. The work permit issued by the Maldivian authorities showed the Respondent as an employee of SJM.

The Appellant brought the Singapore Action against the Respondent, claiming that the latter had (inter alia) acted in breach of his duty to the Appellant by effecting certain unauthorised payments to third parties, thereby causing the Appellant to suffer loss. In accordance with the Rules of Court (Cap 322, R 5, 2006 Rev Ed), the Respondent should have filed his defence to the Singapore Action by 27 May 2009. Pursuant to an oral understanding between the parties’ solicitors, the time for filing the Respondent’s defence was extended to 5 June 2009. The Respondent filed his defence on that date, but the document filed was rejected as the wrong suit number was stated in it. The Respondent subsequently re-filed his defence (this time, successfully) on 8 June 2009. Thereafter, it was only on 31 July 2009 – approximately one month and three weeks after the extended deadline for filing the defence – that the Respondent applied (via Summons No 4061 of 2009 (“the Stay Application”)) for a stay of the Singapore Action in favour of proceedings to be instituted in the Maldives as well as for an extension of time to file the application. The Respondent also sought, as an alternative to a stay of the Singapore Action, an order striking out paras 3–23 of the Appellant’s statement of claim (“the Statement of Claim”), which constitute substantially the whole of the Statement of Claim, under O 18 r 19 of the Rules of Court.

The main unauthorised payments alluded to at [4] above, which form the bases of the Singapore Action, are the following:a payment of US$175,000 as alleged commission to one Ahmed Shahid (“Shahid”); anda payment of US$101,982.37 to one Son Chang Ju (“Son”), a former employee of the Appellant.

We should add that legal proceedings in connection with the above two payments were earlier commenced in the Maldives, and judgments have already been given by the courts there. The judgments in those proceedings (which are different from the contemplated Maldivian proceedings mentioned at [4] above) include:a judgment obtained by Shahid against SJM for payment of US$175,000;² anda judgment obtained by Son against SJM for payment of US$101,982.37.³

At this juncture, we should further add that the Respondent has successfully sued SJM in the Maldives (in Case No 733/MC/2008 (“the Maldivian profit suit”)) for wrongful termination of employment and compensation.⁴ In that action, the Civil Court of the Maldives found that the Respondent was an employee of SJM⁵ (see [30] of the GD, and cf the Judge’s tentative view (at [31] of the GD) that the Respondent was an employee of the Appellant). Although SJM is a separate legal entity from the Appellant, Seung is a substantial shareholder and director of both companies (see [2] above). In the circumstances, this begs the question: if the Respondent had indeed made unauthorised payments to Shahid and Son, why did SJM not raise that as a counterclaim in the Maldivian profit suit?

Issues before the court below

Before the Judge, broadly, two main issues were raised:first, whether the Respondent, given that he had taken steps in the Singapore Action and, further, had filed the Stay Application long after the deadline prescribed by O 12 r 7(2) of the Rules of Court, was precluded from applying for a stay of the Singapore Action (“the First Issue”); andsecond, if the Respondent were not so precluded, whether a stay of the Singapore Action should be granted on the ground of forum non conveniens (“the Second Issue”).The Judge answered the First Issue in the negative and the Second Issue in the affirmative.

Decision of the JudgeThe First Issue

Apropos the First Issue, the Judge applied Chan Chin Cheung v Chan Fatt Cheung and others[2010] 1 SLR 1192 (“Chan”) in holding that the Respondent, despite having taken steps in the Singapore Action (by, inter alia, filing his defence) and despite having made the Stay Application late, was not precluded from applying to stay the Singapore Action since there had not been any prejudice to the Appellant which could not be compensated by costs (see the GD at [10]–[11]). However, the Judge also expressed some reservations about the decision in Chan (see the GD at [12]–[19]; see also [32] below). He seemed to be of the view that:this court’s decision in Chan was open to question because it was based on case law which involved factual circumstances that were significantly dissimilar to those found in Chan (see the GD at [12]–[13]); andthe test of prejudice adopted in Chan for determining whether a defendant who had taken steps in the proceedings and who was also late in applying for a stay should be precluded from making a stay application – namely, the test of “whether there was any prejudice to the [plaintiff] which could not be compensated by costs” (see the GD at [10]), which test the Judge found to be applicable to the case before him (see the GD at [11]) – was unsatisfactory because it could lead to unsatisfactory results in the context of stay applications (see the GD at [15] and [19]).

In expressing his reservations about Chan, the Judge suggested that the test of prejudice should not be the sole or primary factor for determining whether a defendant should be granted an extension of time to file a stay application as such a test “place[d] an unfair burden on the plaintiff to show good reasons why a defendant should not be allowed to make his application for a stay late”. Instead, the Judge opined, “[t]he burden should be on the party who [was] making the late application [for a stay of proceedings] to adduce good reasons to show why he should be allowed to make his application although he [was] out of time” (see, likewise, [16] of the GD).

The Second Issue

Turning to the Second Issue, the Judge applied what is commonly called “the Spiliada test” – ie, the test laid down by the House of Lords (now known as the Supreme Court of the UK) in Spiliada Maritime Corporation v Cansulex Ltd[1987] AC 460 (“Spiliada”) – to determine whether a stay of the Singapore Action should be granted on the ground of forum non conveniens. Under the first stage of that test, the question which the court has to consider is whether there is prima facie some other available forum having competent jurisdiction that is more appropriate for the trial of the dispute in question. In this regard, the connecting factors raised in the present case by counsel for the respective parties and considered by the Judge were the following:the governing law of the dispute between the Appellant and the Respondent (“the Dispute”);the identity of the employer of the Respondent under his employment contract at the material time (“the Employment Contract”);the place where the Respondent carried out his work under the Employment Contract;the place where the Respondent’s alleged breaches of the Employment Contract took place; andthe availability of key witnesses in the Maldives.

After considering the evidence, the Judge came to the tentative view that (as mentioned earlier at [2] above) the Respondent was employed by the Appellant at the material time but was seconded to work for SJM in the Maldives, and that since the alleged breaches of the Employment Contract occurred in the Maldives, Maldivian law was probably the governing law relating to those alleged breaches. Further, and more importantly, as all the relevant witnesses were in the Maldives and were not willing to come to Singapore to testify, on balance, the Judge held, the relevant factors favoured the Maldives as the more appropriate place for the trial of the Dispute.

Moving on to the second stage of the Spiliada test (which entails a consideration of whether, although there is prima facie another...