Tah Li Thong Foam Industry v Furniture & Furnishings Pte Ltd

• Jurisdiction: Singapore
• Judge: Clement Seah Chi-Ling
• Judgment Date: 29 July 2022
• Neutral Citation: [2022] SGDC 160
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 2114 of 2021, DC/RA 30 of 2022, HC/RAS 18 of 2022
• Published date: 06 August 2022
• Year: 2022
• Hearing Date: 29 June 2022,30 June 2022,25 April 2022
• Plaintiff Counsel: Lee Chay Pin Victor (Chambers Law LLP)
• Defendant Counsel: Clarence Lun Yaodong and Cheston James Ow (Fervent Chambers LLC)
• Subject Matter: Civil Procedure,Summary Judgement,Whether Triable Issues raised,Counterclaim,Whether unconditional leave to defend should be granted in light of the subsisting counterclaim,Whether claim should be stayed pending resolution of counterclaim
• Citation: [2022] SGDC 160

District Judge Clement Seah Chi-Ling: Introduction

The present appeal arose out of the Plaintiff’s application by way of DC/SUM 4931/2021 in DC/DC 2114/2021 for summary judgment to be entered against the Defendant in the sum of $149,173.88, plus interest and costs, on the ground that the Defendant has no defence to the Plaintiff’s claim. Deputy Registrar Jonathan Toh (the “DR”) heard the application at first instance and entered summary judgement in the Plaintiff’s favour for the full amount claimed, and further declined to stay the enforcement of the claim pending the disposal of the Defendant’s counterclaim.

The Defendant appealed against the learned DR’s decision by way of DC/RA 30/2022 (the “RA”) which came before me. After hearing the parties’ submissions, I affirmed the DR’s decision. As the Defendant has since filed a further appeal against my decision, I set out the grounds of my decision below.

Background Facts The Parties

The Plaintiff is a manufacturer and supplier of mattresses and bed frames, and operates a factory located at 28 Senoko Loop, Singapore 758161.

The Defendant is in the business of retail sale of furniture and furnishing products. The Defendant is a wholly owned subsidiary of TT International Limited (“TT International”). TT International is the holding company of a group of companies that includes Novena Furnishing Centre Pte. Ltd. As part of the arrangement within the group of companies, the Defendant markets and sells the “Novena” brand of furniture.¹

As part of its business, the Defendant manages showrooms at which it displays its goods procured from different suppliers. The Defendant’s customers would visit its showrooms and place orders for the purchase of furniture and furnishing products.

The Business Arrangements between the Plaintiff and Defendant

In or around November 2014, the Plaintiff and Defendant entered into a verbal agreement (the “Agreement”) under which the Plaintiff was allotted space within the Defendant’s showrooms located at 47 Sungei Kadut Avenue, Level 2, Singapore 729670 and 5 Little Road, #02-02, Singapore 536983 (the “Defendant’s Showrooms”). The allotted spaced was used by the Plaintiff to display “Princebed” brand bedframes and mattresses manufactured by the Plaintiff.

As part of the Agreement, parties also came to a business arrangement whereby the Defendant would buy the goods ordered by their customers from the Plaintiff (the “Goods”) to resell to their customers. The broad arrangements were as follows: The Defendant’s customers would visit the Defendant’s Showrooms and place orders for the Goods with the Defendant; The Defendant will collect full payments from its customers for their purchase of the Goods and issue Order Confirmations to the said customers; The Defendant would purchase the Goods from the Plaintiff to fulfil the orders placed by the Defendant’s customers; The Goods purchased by the Defendant would be delivered to its customers by the Plaintiff; Upon delivery of the Goods to the Defendant’s customers, any balance payment owed by its customers would either be paid to the Defendant directly or the Plaintiff’s delivery personnel would collect cheques from the Defendant’s customer on behalf of the Defendant; and. Invoices would be generated by the Plaintiff after the delivery of the Goods.

An agreed sum was paid by the Plaintiff to the Defendant every month as advertisement and rental support for the space allotted to the Plaintiff in the Defendant’s Showrooms (the “Subsidy”). The Defendant would deduct the Subsidy from any payments to be made by the Defendant to the Plaintiff for the sale of Goods to the Defendant. Nothing in the present application turned on the Subsidy².

Delay in payments

It was not disputed that a credit term of 60 days applied to the Plaintiff’s invoices. It is the Plaintiff’s case that the Defendant had delayed payments for the Goods for periods far beyond the credit term period.

According to the Plaintiff, the Plaintiff’s manager, one Tay Kong Shing (“Mr Tay”), spoke to the Defendant’s manager, one Sng Yi (“Mr Sng”), on many occasions requesting the Defendant to abide by the payment terms. When the Defendant persistently failed to do so, the Plaintiff instructed their solicitors, M/s Chambers Law LLP, to issue a letter of demand dated 9 July 2021 (the “1st LOD”) to claim for the unpaid price of Goods sold to the Defendant. The sum claimed under the 1st LOD was $191,825.12.

After the 1st LOD was sent by the Plaintiff’s solicitors, by an email dated 15 July 2021, Mr Sng, on behalf of the Defendant proposed to pay the outstanding debt, by weekly instalments of $15,000, commencing from 21 July 2021. A condition of the instalment payments stipulated by the Defendant was that the Plaintiff would withdraw the 1st LOD before 21 July 2021. A copy of Mr Sng’s email of 15 July 2021 is exhibited to Mr Tay’s 1st affidavit dated 22 December 2021 at Exhibit TKS-6.

The Plaintiff asserted that out of business goodwill, it agreed to accede to the Defendant’s instalment request, but not to the withdrawing of the 1st LOD. When the Plaintiff did not withdraw the 1st LOD, the Defendant refused to commence the instalment payments on 21 July 2021.

According to the Plaintiff, in the late afternoon of 21 July 2021, Mr Sng called Mr Tay and told Mr Tay to remove all the Plaintiff’s goods at the Defendant’s Showrooms by the end of July 2021. Mr Sng also told Mr Tay that with effect from 22nd July 2021, the Plaintiff’s sales promoters could not continue to work at the Defendant’s Showrooms.

Pursuant to Mr Sng’s directions, the Plaintiff brought back their goods and withdrew their sales promoters from the Defendant’s Showrooms, bringing the Agreement to an end.

Thereafter, the Defendant called up their customers who had purchased the Goods from the Defendant’s Showrooms to cancel their purchase and/or change the Plaintiff’s goods they had ordered to other brands or to purchase other products.

The Plaintiff thereafter made further demands for payments on 16 August 2021 (the “2nd LOD”) and on 10 September 2021 (the “3rd LOD”) respectively. When the Defendant did not respond to the 3rd LOD, the Plaintiff initiated the present action on 5 October 2021.

The Procedural History The Statement of Claim

The Plaintiff’s Writ with the Statement of Claim (“SOC”) endorsed thereon was filed on 5 October 2021. In Paragraph 7 of the SOC, the Plaintiff claimed the sum of $149,173.88 in respect of goods sold to the Defendant and delivered to the Defendant’s customers upon the Defendant’s instructions (the “Claimed Amount”). A breakdown of the sum of $149,173.88 was set out in paragraph 7 of the SOC.

The Original Defence and Counterclaim

The Defendant filed its original Defence and Counterclaim on 29 October 2021. In its original Defence, the Defendant did not raise a specific Defence to the Plaintiff’s claim, and merely put the Plaintiff to strict proof of the Claimed Amount.

In the Defendant’s original Counterclaim, the Defendant cross-claimed a sum of $89,542.00 in respect of losses allegedly suffered arising from the Plaintiff’s failure and/or delay in the delivery of goods. The Defendant claimed that the losses arose from the following: Loss of sales due to cancellation of orders by customers caused by the Plaintiff’s failure and/or delays in delivering the said goods; Costs and expenses incurred by the Defendant in sourcing and arranging for alternative service providers and replacement products to fulfil existing orders to customers, which the Plaintiff had been contractually obligated to fulfil; and Costs and expenses incurred by the Defendant in salvaging its relationships with customers and protection of its reputation which includes, inter alia, offering additional discounts, rebates, vouchers, free gifts, and product upgrades to affected customers.³

No set off was pleaded in the Original Defence and Counterclaim.

The Amended Defence and Counterclaim

The RA first came for hearing before me on 25 April 2022. Defence Counsel intimated at the hearing that he wished to amend the Defence and Counterclaim. The RA was then adjourned for further hearing pending the hearing of DC/SUM 1391/2022, which was the Defendant’s application to amend their Defence and Counterclaim.

DC/SUM 1391/2022 was heard on 12 May 2022 by a Deputy Registrar who granted the Defendant leave to amend the Defence and Counterclaim. The amended Defence and Counterclaim was filed on 19 May 2022 and the amended Reply and Defence to Counterclaim was filed on 9 June 2022.

The Amended Defence and Counterclaim contained very substantial amendments. The key changes for present purposes are: The Plaintiff pleaded for the first time that: (i) once the Defendant has issued an Order of Confirmation to the Plaintiff, the Plaintiff must fulfil the orders placed by the Defendant’s customers⁴; and (ii) the Plaintiff is required to deliver the Goods to the Defendant’s customers by the requested delivery date. Time is of essence under the Agreement⁵; In addition to the three heads of losses itemised in paragraph 11 of the Original Defence and Counterclaim (see [19] above), the Defendant added in the Amended Defence and Counterclaim a further head of claim for “Losses arising out of loss of business reputation and/or goodwill and/or future profits⁶; The Defendant drew a distinction between “fulfilled” and “unfulfilled” orders transacted under the Agreement. The Defendant stated that out of a total of 287 orders transacted between the Plaintiff and Defendant under the Agreement, the Plaintiff was able to fulfil 187 orders, for which an amount of $149,173.88 remains outstanding (“Outstanding Amount”). The Defendant, however, pleaded that the Plaintiff had unilaterally suspended a significant portion of deliveries that were to be fulfilled, comprising approximately 100 out of the 287 orders...