Sun Jin Engineering Pte Ltd v Hwang Jae Woo

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 13 April 2010
• Neutral Citation: [2010] SGHC 111
• Date: 13 April 2010
• Docket Number: Suit No 379 of 2009 (Registrar’s Appeal No 340 of 2009)
• Published date: 16 April 2010
• Plaintiff Counsel: A Rajandran (A. Rajandran)
• Hearing Date: 18 November 2009,11 March 2010,09 March 2010,14 January 2010,05 April 2010,01 October 2009,25 November 2009,24 February 2010,02 December 2009
• Defendant Counsel: Haresh Kamdar (KhattarWong)
• Court: High Court (Singapore)
• Subject Matter: Civil Procedure

Woo Bih Li J: Introduction

This appeal was in respect of the decision of an Assistant Registrar (“AR”) on 4 September 2009 to stay proceedings in an action commenced by the plaintiff, Sun Jin Engineering Pte Ltd (“SJE”), a Singapore company, against the defendant, Hwang Jae Woo (“Hwang”), on the ground of forum non conveniens. I dismissed SJE’s appeal and now give the grounds for my decision.

Background

One Seung Yong Chung (“Seung”) alleged that he was the majority shareholder of SJE and substantive shareholder of Sun Jin Engineering (M) Sdn Bhd (“SJM”), a company incorporated in Malaysia, and under SJE’s control. SJM was the main contractor of two building projects in the Maldives (“the projects”). It was SJE’s case that Hwang was one of its employees seconded to SJM for the purpose of the projects.

SJE claimed that Hwang had acted in breach of his duty to it and caused it loss. As such, it instituted an action in Singapore to recoup those losses, which were as follows: a payment of US$20,470.59 to a fictitious company, which was authorized by Hwang; a payment of US$175,000 as alleged commission to one Ahmed Shahid (“Shahid”), which was authorized by Hwang in breach of his authority; a payment of US$101,982.37, of which $75,000 was a bonus to SJE’s former employee, Son Chang Ju (“Son”), which was authorized by Hwang. The balance was for Son’s arrears for salary and compensation for termination of services. In addition to the above, SJE also sought to recover US$50,000 allegedly lent to Hwang. SJE also mentioned a sum of US$500,000 that the Maldivian courts had ordered SJM to pay to Hwang in Maldivian Suit No 733/MC/2008 (“the profit suit”), but this was not the subject of SJE’s Singapore proceedings. It was mentioned as background information in order to set the context of a number of disputes involving Hwang.

Hwang applied, inter alia, to stay the Singapore proceedings in favour of the Maldives. He accepted that the stay application did not extend to the alleged loan of US$50,000, which should be dealt with by the Singapore court. On the other hand, SJE accepted that it would not pursue its claim for the US$20,470.59 in Singapore. Therefore, the stay application ultimately only involved the payments Hwang had authorised to Shahid and Son.

The issues in this appeal were: whether Hwang was precluded from applying for a stay on the grounds of forum non conveniens by reason of his delay in making the application and, if not whether a stay should be granted.

Whether Hwang was precluded from applying for a stay

The first issue called for my consideration of steps taken by both parties in the Singapore proceedings. The chronology of events was as follows: The writ was served on Hwang personally in Singapore on 5 May 2009; Hwang’s appearance was filed on 7 May 2009; Hwang’s defence was due on 27 May 2009; On 27 May 2009, Hwang’s solicitors wrote to SJE’s solicitors, seeking a two week extension for the filing of his defence and to consider any necessary applications to be made; On 2 June 2009, SJE’s solicitors faxed and posted a letter to Hwang’s solicitors, giving them 48 hours’ notice to file the defence. However, Hwang’s solicitors claimed that they received the hard copy only on 3 June 2009 and not the fax of 2 June 2009; On 4 June 2009, Hwang’s solicitors wrote seeking a further extension of time till the next day to file the defence. They added that their client would be taking out an application to strike out parts of the claim and/or for the action to be stayed in favour of litigation in the Maldives on the ground of forum non conveniens. On that basis, they asked whether Hwang would be allowed to withhold filing the defence pending the final disposition of the intended applications; On the same day, ie, 4 June 2009, Hwang’s solicitors wrote a further fax confirming SJE’s solicitors’ oral agreement to extend time for the filing of the defence to Friday, 5 June 2009; Hwang’s defence was filed on 8 June 2009; SJE filed its reply on 22 June 2009; Hwang filed his amended defence on 6 July 2009; and finally Hwang only filed his stay application on 31 July 2009, which was one month and three weeks after the extended deadline to file the defence, ie 5 June 2009. In the same application, he invoked the Court’s jurisdiction to strike out the action pursuant to O 18 r 19 of the Rules of Court (Cap 322, 2006 Rev Ed)(“Rules”).

In the course of argument, SJE raised a preliminary point¹, namely whether Hwang’s application for a stay on the ground of forum non conveniens should be allowed in light of O 12 r 7(2) of the Rules because the application for a stay of proceedings was filed late.

O 12 r 7(2) of the Rules provide as follows:

A defendant who wishes to contend that the Court should not assume jurisdiction over the action on the ground that Singapore is not the proper forum for the dispute shall enter an appearance and, within the time limited for serving a defence, apply to Court for an order staying the proceedings. [emphasis added]

Order 12 Rule 7(2) was considered in Chan Chin Cheung v Chan Fatt Cheung and others [2009] SGCA 62 (“Chan”). There, the Court of Appeal (“CA”) held that while the filing of a defence might disentitle a defendant from contesting the court’s jurisdiction, this step did not preclude a defendant from applying for a stay on the ground of forum non conveniens. In that case, the appellant commenced three suits in Malaysia against the trustees of an estate for breach of their duties. Subsequently, the appellant began an action in Singapore against the respondent for defamation, and the respondents filed their defence, claiming justification. The appellant applied in the Malaysian courts to stay the first of the three Malaysian suits pending the disposal of the Singapore action. That application was dismissed and the respondents then sought to stay the Singapore proceedings pending the outcome of the Malaysian proceedings. The issue which then arose and which was relevant to this case before me was whether the respondents, having taken steps in the Singapore proceedings, were barred from seeking a stay on the ground of forum non conveniens.

In Chan, the CA held at [22] that although the respondents’ application for a stay was made late and only after it had taken steps in the proceedings by filing their defence, this did not bar them from applying for a stay per se. The test was whether there was any prejudice to the appellant which could not be compensated by costs. Since there was none, the late application did not in itself preclude the stay application. On the facts there, the CA upheld the decision of the High Court to grant a stay of the Singapore action.

Applying the decision in Chan to the present case, Hwang was not precluded from applying for a stay although he had taken steps in the proceedings by filing and amending his defence and even though his application for a stay of proceedings included an alternative prayer to strike out the action. There was no prejudice to SJE which could not be compensated by costs.

However, I would add that I have reservations about the decision of the CA in Chan. The CA had referred to the case of The “Tokai Maru” 1998 2 SLR(R) 646 (“Tokai Maru”) and noted that a party should not be precluded from presenting his case unless there was prejudice which could not be compensated by costs. However, Tokai Maru was not a case in which a defendant had filed his stay application late. In that case, the party was filing an affidavit of evidence-in-chief late and the court was loath to preclude that party from presenting its case.

In resisting an application for a stay of proceedings, a plaintiff is not seeking to preclude a defendant from presenting his case. On the contrary, the plaintiff is suggesting that the defendant should do so but that he should do so in Singapore.

Furthermore, the purpose of O 12 r 7(2) is to ensure that a defendant files his application for a stay as soon as possible and before taking a step in the proceedings, usually by filing the defence. It is expressly stated in O 12 r 7(2) that a defendant should apply for a stay within the time limited for serving a defence. It implicitly recognises that the filing of a defence is incongruous with the application for a stay. The rationale for the application for a stay is that the merits of the dispute should be litigated elsewhere; a defence addresses the merits of the dispute. Therefore, once a stay application is filed and served, it should be combined with an alternative prayer for an extension of time to file the defence pending the outcome of the final resolution of the stay application, including resolution by way of appeal. Furthermore, a plaintiff should refrain from insisting that the defendant file his defence once the stay application is served. I have mentioned this procedure before. If it is really necessary to file a protective defence to avoid judgment in default of defence then the defence should specifically state that it is filed without prejudice to the stay application.

If the test is merely one of prejudice, it may lead to unsatisfactory results. For example, a defence may well trigger a slew of applications including summary judgment, further and better particulars or discovery. Should any or all of these steps be undertaken only for the plaintiff to subsequently encounter an application for a stay? I do not think so.

In my view, the threshold for granting an extension of time should not primarily or solely be whether the plaintiff has suffered prejudice which cannot be compensated by costs. This places 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. The burden should be on the party who is making the late application to adduce good reasons to show why he should be allowed to make his...