Bryan Fang AR:
The plaintiff, Telecom Credit Inc (“the Judgment Creditor”), entered default judgment against the defendant, Star Commerce Pte Ltd (“the Judgment Debtor”) and proceeded to apply for and obtain two ex parte provisional garnishee orders in HC/SUM 5728/2016 (“SUM 5728”) and HC/SUM 5729/2016 (“SUM 5729”) against IFKAP Pte Ltd (“IAP”) and Midas United Group Pte Ltd (“Midas”) respectively. At the show cause hearing before me, the Judgment Creditor applied to make absolute the provisional garnishee order against Midas while reserving its position against IAP pending the determination of the former. Midas was represented and challenged the application. It submitted that the provisional garnishee order in SUM 5729 should be discharged as the debt sought to be garnished from it was not a debt due or accruing due to the Judgment Debtor. IAP was not present but, given the Judgment Creditor’s position, no arguments were heard in SUM 5728.
Order 49 r 5 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) provides the court with two options where the garnishee disputes liability to pay the debt claimed to be due or accruing due from it to the judgment debtor: the court may either summarily determine the issue one way or the other or order that the issue be tried. Some disagreement emerged towards the end of oral arguments as to when the court should prefer one option over the other as a result of which parties tendered further short written submissions to deal with the point. The dispute centred, essentially, on whom the burden of proof lies in garnishee show cause proceedings and what that burden entailed. The parties took guidance from a series of recent local decisions (which were all handed down in the same litigation: see Teleoptik-Ziroskopi and others v Westacre Investments Inc and other appeals [2012] 2 SLR 177 (“Teleoptik”); Westacre Investments Inc v The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) and others [2015] 4 SLR 529 (“Westacre (HC)”); and The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) v Westacre Investments Inc and other appeals [2016] 5 SLR 372 (“Westacre (CA)”)), but have interpreted them differently to lead to the present confusion. I therefore take the opportunity to clarify this preliminary but important point before setting out the facts.
Turning to the arguments, counsel for the Judgment Creditor, Mr Moiz Sithawalla, highlights that a judgment creditor would already have obtained a provisional garnishee order by the time of the show cause hearing. This, he says, operates to shift the burden of proof to the garnishee who must then raise at least an arguable defence before a trial may be ordered, failing which the court should make the provisional order absolute. Counsel for Midas, Mr Wendell Wong, takes a different view. Drawing from certain statements made by the Court of Appeal in Westacre (CA), especially at [86], he says that there is a distinction to be made between the existence of a debt owing from the garnishee to the judgment debtor and the attachment of that debt: where there is a dispute over the former (as in the present case), the burden lies on the judgment creditor at the show cause hearing to prove on a balance of probabilities that the claimed debt exists, whereas if the dispute concerns only the latter, then the burden lies on the garnishee to show cause why it would be inequitable or unfair for the debt to be attached. The effect of Mr Wong’s submission is that a judgment creditor must prove conclusively the existence of the debt at the show cause stage and, if he fails to do so, he cannot improve his case at trial.
Having reviewed the authorities, I find myself in broad agreement with Mr Sithawalla’s submissions though I hasten to clarify that it would be incorrect to say that the legal burden shifts to the garnishee upon the judgment creditor obtaining a provisional garnishee order; so much is clear from the Court of Appeal’s decision in Westacre (CA) at [82] that the legal burden remains throughout on the judgment creditor to prove the existence of the debt (ie, the garnishee’s liability to pay the debt) (see also Westacre (HC) at [24]). But that is not to say that a provisional garnishee order has no legal significance on its own that carries into and, in a sense, sets up the parties at the start of the show cause proceedings. Broadly speaking, in my view, a judgment creditor who obtains a provisional garnishee order will have at least succeeded in transferring the initiative to the garnishee to step forward and dispute his liability to pay the judgment debtor, in the absence of which the court may proceed to make the provisional garnishee order absolute (see, in this regard, O 49 r 4). Indeed, to articulate this in more precise terms, I consider it useful to borrow from summary judgment principles to say that once a provisional garnishee order is granted, the judgment creditor must be taken to have established at least the prima facie existence of the debt which places a tactical burden on the garnishee to contradict the judgment creditor’s case. It is of course then open to the judgment creditor to introduce evidence or raise arguments to undermine the garnishee’s defence but if, once all the evidence is in, the court is satisfied that the garnishee has at least an arguable defence, a trial will be ordered. I elaborate on this in the next paragraph but will first pause to explain that I have found it instructive to draw parallels between summary judgment proceedings and garnishee show cause proceedings because, in both contexts, the court is required to undertake an assessment of whether the issue of one party’s liability ought to be summarily determined on affidavit evidence alone or resolved at trial. While indeed differences exist between the two proceedings (eg, the court conducts garnishee proceedings in two distinct stages (an ex parte stage and a show cause stage) while there is only one inter partes summary judgment hearing), this does not in my view detract from the fact that the question which confronts the court at the end of the day in both kinds of proceedings is much the same.
Looking then to the principles which govern a summary judgment application, it is settled law that the plaintiff must first establish a prima facie case and, if he does so, the tactical burden shifts to the defendant who, in order to obtain leave to defend, must establish that there is a fair or reasonable probability that he has a real or bona fide defence (see Ritzland Investment Pte Ltd v Grace Management & Consultancy Services Pte Ltd [2014] 2 SLR 1342 (“Ritzland”) at [43]–[45]; see also M2B World Asia Pacific Pte Ltd v Matsumura Akihiko [2015] 1 SLR 325 at [17]–[18]). If the plaintiff succeeds in showing, after all the evidence is in, that there is no such arguable defence, then summary judgment will be ordered (see Ritzland at [47]). Viewing garnishee proceedings through the same lens, and as alluded to above, I think that a judgment creditor necessarily establishes the prima facie existence of the debt sought to be garnished once he obtains a provisional garnishee order because such an order would plainly not have been granted if he could not even adduce sufficient evidence to cross this threshold in the first place. This places a tactical burden on the garnishee at the show cause hearing to challenge the judgment creditor’s prima facie case by adducing contrary evidence to discredit it, advancing legal submissions to show that it is misconceived, or employing a combination of both. The judgment creditor may then do likewise to undermine whatever defence the garnishee has mustered. Ultimately, the court must be satisfied based on all the evidence put before it that the garnishee has a defence that is at least arguable or, to put it another way, one that is not hopeless, before a trial may be ordered. Such indeed was the observation made by the Court of Appeal in Teleoptik at [35]–[36].
For several reasons which I shall state briefly, I am, with respect, unable to accept Mr Wong’s submission that a judgment creditor must conclusively prove the garnishee’s liability at the show cause stage. First, this is not supported by the language of O 49 r 5 which plainly allows the court to order a trial where “the garnishee disputes liability to pay the debt due or claimed to be due from him to the judgment debtor”. Second, it overlooks the...
