Tan Hup Yuan Patrick v The Griffin Coal Mining Company Pty Ltd

• Jurisdiction: Singapore
• Judgment Date: 06 August 2014
• Date: 06 August 2014
• Docket Number: Originating Summons (Bankruptcy) No 13 of 2013 (Registrar's Appeal No 170 of 2013) (Summonses Nos 3041 and 5261 of 2013)
• Court: High Court (Singapore)

Tan Hup Yuan Patrick

Plaintiff

and

The Griffin Coal Mining Co Pty Ltd (administrators appointed) and others

Defendant

[2014] SGHC 156

Woo Bih Li J

Originating Summons (Bankruptcy) No 13 of 2013 (Registrar's Appeal No 170 of 2013) (Summonses Nos 3041 and 5261 of 2013)

High Court

Insolvency Law—Bankruptcy—Statutory demand—Consent judgment made pursuant to settlement agreement—Statutory demand issued when plaintiff failed to pay judgment sum—Whether plaintiff had valid cross-claim against defendants arising from defendants' breach of alleged agreement—Whether plaintiff was asking court to go behind judgment or order and inquire into validity of debt, prohibited by para 144 Supreme Court Practice Directions (1 January 2013 release) —Rule 98 (2) (e) Bankruptcy Rules (Cap 20, R 1, 2006 Revised Edition)

Res Judicata—Defendants commencing suit against plaintiff—Consent judgment made pursuant to settlement agreement—Statutory demand issued when plaintiff failed to pay judgment sum—Whether plaintiff could argue that defendants had no locus standi to commence suit—Whether plaintiff could argue that he had valid cross-claim against defendants arising from defendants' breach of alleged agreement

The defendants commenced Suit No 749 of 2010 (‘the Singapore Suit’) against the plaintiff for, inter alia, an alleged breach of a deed of guarantee dated 27 August 2010 (‘the Guarantee’). A statutory demand (‘the Statutory Demand’) was issued when the plaintiff failed to pay the sums due under a consent judgment dated 20 November 2012 (‘the Consent Judgment’) made in the Singapore Suit. This Consent Judgment was made pursuant to a settlement agreement dated 19 November 2012 entered into by the parties (‘the Settlement Agreement’). The assistant registrar dismissed the plaintiff's application for the Statutory Demand to be set aside, and the plaintiff appealed against this order.

The plaintiff made two arguments to support his application to set aside the Statutory Demand. First, since the defendants had assigned to another party its interests under the Guarantee, the defendants were not entitled to maintain the Singapore Suit and enter judgment against the plaintiff (‘the locus standi argument’). Secondly, the plaintiff argued that he had a valid cross-claim against the defendants arising from the defendants' breach of an alleged agreement (‘the Sydney Agreement’) before the parties entered into the Settlement Agreement (‘the cross-claim argument’). The thrust of the Sydney Agreement was that the plaintiff had allegedly agreed to discount five standby letters of credit which the defendants were looking to discount and in consideration of this, the defendants allegedly agreed that the Singapore Suit would be considered settled. The defendants allegedly breached the Sydney Agreement by failing to provide the plaintiff with the wording of the standby letters of credit.

The main issue was whether the plaintiff could raise these two arguments to resist the Statutory Demand in the light of the Settlement Agreement and the Consent Judgment.

Held, dismissing the appeal:

(1) Rule 98 (2) (e) of the Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed) (‘the Rules’), which set out the grounds which a court could rely on to set aside a statutory demand, was to be read with para 144 of the Supreme Court Practice Directions(1 January 2013 release) (‘the PD’): at [12] and [13] .

(2) The effect of para 144 (2) of the PD was to supplement r 98 (2) (b) because r 98 (2) was not confined to the situation where the statutory demand was based on a judgment. Where it was based on a judgment, para 144 (2) of the PD stated that the court would not inquire into the validity of the debt. In other words, any dispute on the debt would not appear to be substantial under r 98 (2) (b). While practice directions did not have the force of law, they were directions from the court nonetheless and a court would not normally depart from its directions unless there was a good reason for doing so: at [15] .

(3) In the present case, the locus standi argument challenged the defendants' entitlement to commence the Singapore Suit against the plaintiff as the locus standi argument was that the defendants were not the right parties to make the original claim in the Singapore Suit. By making this argument, the plaintiff was asking the court to go behind the Consent Judgment and inquire into the validity of the debt, namely, whether the debt was indeed owed to the defendants. The plaintiff was not entitled to do this pursuant to para 144 (2) of the PD: at [16] .

(4) The plaintiff was also prevented from making the locus standi argument by cause of action estoppel. Since the Consent Judgment provided that final judgment be entered against the plaintiff and that the plaintiff was to pay the defendants the stated sum, the plaintiff was to be taken to have consented to the defendants' locus standi to make the claim. A consent order was as efficacious as orders pronounced after a contest in creating cause of action estoppel. In effect, the plaintiff's locus standi argument was a plea that the defendants had no cause of action against the plaintiff and hence contradicted the Consent Judgment which was given on the basis that the defendants had a cause of action against the plaintiff: at [17] and [19] .

(5) The plaintiff was also precluded by the defence of abuse of process from raising the locus standi argument. The plaintiff failed to raise the locus standi argument in the Singapore Suit, but instead agreed to the Consent Judgment to be entered. The plaintiff should not have agreed to the Consent Judgment if he did not accept that the defendants were the correct claimants. No reason was given as to why he raised the locus standi argument so late. In the circumstances, the plaintiff's attempt to set aside the Statutory Demand in the present case had become unduly oppressive to the defendants and was nothing more than a collateral attack on the Consent Judgment: at [20] and [23] .

(6) The plaintiff's cross-claim argument was not correctly characterised as a cross-claim or counterclaim. Instead, the plaintiff's cross-claim argument would in substance be a defence to the defendants' claim in the Singapore Suit because the plaintiff appeared to be alleging that the plaintiff's benefit from the alleged Sydney Agreement was that the Singapore Suit would be considered settled. Accordingly, the same objections against the plaintiff raising the locus standi argument apply to the plaintiff's cross-claim argument, namely, the plaintiff was precluded from raising the cross-claim argument pursuant to para 144 (2) of the PD, and the defence of abuse of process applied. Therefore, the debt was not disputed on grounds which appeared to be substantial or that there were any genuine triable issues: at [26] .

(7) In any event, any alleged Sydney Agreement was clearly and expressly superseded by cl 6 of the Settlement Agreement, which provided that the Settlement...