Thomson Rubbers (India) Pte Ltd v Tan Ai Hock

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 29 November 2011
• Neutral Citation: [2011] SGHC 256
• Court: High Court (Singapore)
• Docket Number: Suit No 228 of 2011(Registrar’s Appeal No 259 of 2011)
• Published date: 02 December 2011
• Year: 2011
• Hearing Date: 08 September 2011
• Plaintiff Counsel: Low Chai Chong - counsel instructed (Rodyk & Davidson LLP) and Wu Yu Liang (Wu LLC)
• Defendant Counsel: Chenthil Kumarasingam (Lawrence Quahe & Woo LLC)
• Subject Matter: Bills of Exchange And Other Negotiable Instruments,Dishonour,Legal Proceedings,Summary Judgment,Consideration,Sufficiency
• Citation: [2011] SGHC 256

Lai Siu Chiu J:

This was an appeal by Thomson Rubbers (India) Private Limited (“the plaintiff”) in Registrar’s Appeal No 259 of 2011 (“the Appeal”) against the decision of the Assistant Registrar in granting Tan Ai Hock (“the defendant”) unconditional leave to defend the plaintiff’s claim instead of awarding the plaintiff summary judgment in the sums of S$709,065 and S$616,698 (“the two sums”). I allowed the Appeal, reversed the decision of the court below and granted summary judgment to the plaintiff on its claim. As the defendant has appealed (in Civil Appeal No 116 of 2011) against my decision, I now set out the grounds for my decision.

The facts

The plaintiff commenced this suit claiming the aforementioned two sums which were the subject of two cheques issued to the plaintiff by the defendant that were dishonoured upon presentation.

The defendant was a shareholder and director of a company called Third Wind Rubber Pte Ltd (“Third Wind”). The defendant’s wife, Tan Heok Tze (“Mdm Tan”), was the only other shareholder of Third Wind. The plaintiff entered into three contracts (“the Thomson Rubbers Contracts”) with Third Wind on 18 August 2010, 25 August 2010 and 7 September 2010. Pursuant to the Thomson Rubbers Contracts, Third Wind was to supply a total of 504 metric tonnes (“MT”) of natural rubber to the plaintiff between September 2010 and October 2010. The plaintiff intended to use the 504 MT of natural rubber, supplied by Third Wind, to fulfil obligations to its own customers. An advance payment of US$559,641.60 (“the advance payment”) was to be paid by the plaintiff to the defendant under the Thomson Rubbers Contracts, and was paid.

The supply of natural rubber which Third Wind intended to rely upon to fulfil its obligation under the Thomson Rubber Contracts was to be provided by an Indonesian company called PT Mas Mulia Crumb Rubber Factory (“PT Mas Mulia”). Pursuant to contracts entered into between Third Wind and PT Mas Mulia, the latter was to supply 504 MT of natural rubber to Third Wind by October 2010. However, according to the defendant, PT Mas Mulia failed to make good its end of the bargain and did not deliver the shipment of 504 MT of natural rubber. As a consequence, Third Wind was unable to perform the Thomson Rubbers Contracts.

In an attempt to resolve matters amicably, the defendant met with an agent of the plaintiff, one Le Thi Bich Tram (“Miss Anna”), on 2 December 2010 in Ho Chi Minh City, Vietnam, at Miss Anna’s office. At this meeting, the defendant signed a letter of undertaking and a settlement agreement. Pursuant to the letter of undertaking, in consideration for the plaintiff’s forbearance in commencing legal proceedings against Third Wind, the defendant undertook to repay the plaintiff the advance payment plus damages. The parties agreed upon an exchange rate, and the sum payable pursuant to the letter of undertaking was US$559,641.60 (equivalent to S$709,065). The settlement agreement detailed the damages suffered by the plaintiff arising from the defendant’s breach of the Thomson Rubber Contracts, and quantified the same at US$483,305.74 or S$616,698.

Upon his return to Singapore on the same day, the defendant issued to the plaintiff two cheques, No 543714 for the sum of S$709,065 and No 543715 for the sum of S$616,698 (hereinafter referred to collectively as “the two cheques”), both drawn upon the bank POSB in Singapore. The two cheques were post-dated to 20 December 2010 and 28 February 2011 respectively. However, when the two cheques were presented for payment by the plaintiff, they were dishonoured. Despite due notices of dishonour from the plaintiff’s solicitors, the defendant did not pay the sums in the two cheques.

The plaintiff’s case

The plaintiff’s case was founded on the Bills of Exchange Act (Cap 23, 2004 Rev Ed) (“the Act”). Section 73(1) of the Act defines a cheque to be “a bill of exchange drawn on a bank payable on demand”. It is incontestable that the two cheques fall within this definition. Section 47 of the Act defines dishonour of bills and prescribes consequences of such dishonour:

Dishonour by non-payment

47.—(1) A bill is dishonoured by non-payment —

(a) when it is duly presented for payment and payment is refused or cannot be obtained; or

(b) when presentment is excused and the bill is overdue and unpaid.

(2) Subject to the provisions of this Act, when a bill is dishonoured by non-payment, an immediate right of recourse against the drawer and indorsers accrues to the holder.

Upon dishonour of a bill, the holder is entitled to recover damages quantified in accordance with s 57 of the Act:

Measure of damages against parties to dishonoured bill

57. Where a bill is dishonoured, the measure of damages, which shall be deemed to be a liquidated amount, shall be as follows:

(a) the holder may recover from any party liable on the bill, and the drawer who has been compelled to pay the bill may recover from the acceptor, and an indorser who has been compelled to pay the bill may recover from the acceptor or from the drawer, or from a prior indorser…

(i) the amount of the bill;

(ii) interest thereon from the time of presentment for payment if the bill is payable on demand, and from the maturity of the bill in any other case;

(iii) the expenses of noting, or, when protest is necessary, and the protest has been extended, the expenses of protest;

(b) where by this Act interest may be recovered as damages, such interest may, if justice requires it, be withheld wholly or in part, and where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as interest proper.

The law on summary judgment

Before I address the defendant’s purported defences to the plaintiff’s claim, it is apposite to first consider the law on summary judgment applications under O 14 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“Rules of Court”). It is trite law that in order to obtain summary judgment, a plaintiff must demonstrate that he has a prima facie case. Upon doing so, the burden shifts to the defendant to establish a fair or reasonable probability that he has a bona fide defence in order to obtain leave to defend the claim: Associated Development Pte Ltd v Loong Sie Kiong Gerald (administrator of the estate of Chow Cho Poon, deceased) and other suits [2009] 4 SLR(R) 389 at [22].

In Goh Chok Tong v Chee Soon Juan [2003] 3 SLR(R) 32 (“Goh Chok Tong”), the Court of Appeal made it clear that leave to defend will not be granted based upon “mere assertions” by defendants (at [25]):

It is a settled principle of law that in an application for summary judgment, the defendant will not be given leave to defend based on mere assertions alone: Banque de Paris et...