Wee Peng Huay v Wong Shee Ying @ Leslie Wong Sze Ying

• Jurisdiction: Singapore
• Judge: Shen Wanqin
• Judgment Date: 29 August 2023
• Neutral Citation: [2023] SGDC 193
• Court: District Court (Singapore)
• Docket Number: Originating Claim No 989 of 2022 (Summons No 926 of 2023)
• Hearing Date: 21 August 2023,29 August 2023
• Citation: [2023] SGDC 193
• Year: 2023
• Plaintiff Counsel: Mr Sathya Justin Narayanan (PDLegal LLC)
• Defendant Counsel: Mr Soon Wei Song (Goh JP & Wong LLC)
• Subject Matter: Civil Procedure,Judgments and orders,Judgment in default of defence,Setting aside,Whether judgment was irregularly obtained if statement of claim does not disclose reasonable cause of action,Contract,Intention to create legal relations,Compromise,Whether forbearance to sue on invalid claim amounts to consideration
• Published date: 06 September 2023

Deputy Registrar Shen Wanqin: Introduction

The parties in this case are former lovers turned adversaries, embroiled in a dispute over monies. The claimant seeks to recover S$115,500 from the defendant, but the latter refuses to pay. The claimant argues that the monies were extended to the defendant as a loan, but the defendant claims that they were love gifts. The claimant therefore brought an action in Originating Claim No 989 of 2022 (“OC 989”) against the defendant for breach of contract. As the defendant failed to file and serve his defence within the prescribed timeline under the Rules of Court 2021, the claimant obtained a judgment in her favour (“the default judgment”). The defendant then brought the present application (Summons No 926 of 2023) (“SUM 926”) to set aside the default judgment.

The main issues in this case are whether the default judgment was regularly or irregularly obtained and whether it should be set aside with any conditions. After considering the parties’ submissions, I granted the application to set aside the default judgment without imposing any additional conditions. I now set out the context and reasons for my decision.

Parties and Background Facts

The claimant and the defendant were lovers from 1968 to 1970. They were then estranged for 40 years before their lives converged again in 2010, when the claimant reconnected with the defendant and learned that he was in financial difficulties and poor health. As such, from 2011 to 2021, the claimant purportedly spent S$120,000 on the defendant’s medical, credit card and car maintenance bills. According to the claimant, the parties agreed that the sum of S$120,000 was a loan that would have to be repaid at the claimant’s request, as she was “not a young woman either”.¹

Sometime around February 2022, the claimant sought repayment of the alleged loan as she needed monies for medical treatment. The claimant contends that the parties subsequently reached a compromise, whereby the claimant agreed to accept S$35,000 in settlement of her claim, if the defendant repaid S$500 per month from April to December 2022 (by the 15th day of each month) and the balance in January 2023, failing which she would be entitled to claim the entire sum of S$120,000.² The defendant paid S$4,500 from April to July 2022, and ceased payments thereafter.³

The claimant then brought OC 989 against the defendant, to recover S$115,500 (i.e., S$120,000 minus S$4,500) (“the monies”) from him. The statement of claim (“SOC”) was served on the defendant on 28 November 2022, and he was statutorily required to serve his defence within 21 days, i.e., by 19 December 2022. The defendant filed his defence on 20 December 2022, one day after the prescribed deadline. The claimant applied for and was granted the default judgment dated 20 December 2022. The defendant filed SUM 926 on 11 April 2022 to set aside the default judgment.

Applicable Legal Principles

The Court of Appeal’s decision in Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] 4 SLR(R) 907 (“Mercurine”) sets out the legal framework and principles to be applied in assessing whether the default judgment should be set aside. The framework is as follows:

First, the court will assess whether the default judgment was regularly or irregularly obtained.

Second, the court will consider the merits of the defence to determine whether the judgment should be set aside: Where the default judgment is regularly obtained, the judgment should be set aside if the defendant can establish a prima facie defence in the sense of showing that there are triable or arguable issues (Mercurine at [60]). Where the default judgment is irregularly obtained, the judgment should be set aside as of right, unless the claimant succeeds in showing the lack of merit in the defence, as evaluated by the “bound to lose” test (Mercurine at [96] and [98]).

Third, the court must consider other relevant considerations, including the defendant’s explanation for his default and delay, as well as any prejudice suffered by the claimant, to achieve a balance between procedural and substantive justice (Mercurine at [99]).

Fourth, if the court decides to set aside the default judgment, the court should consider whether to exercise its discretion to impose a setting-aside order that is conditional on appropriate terms being met (Mercurine at [58] and [60]).

While Mercurine was decided before the enactment of the Rules of Court 2021 (“ROC 2021”), there is nothing in the ROC 2021 or the Report of the Civil Justice Commission (2017) (Chairperson: Justice Tay Yong Kwang) that suggests any change in the law governing the setting aside of default judgments. Indeed, in Zhou Wenjing v Shun Heng Credit Pte Ltd [2022] SGHC 313 at [53], a case governed by the ROC 2021, the High Court applied the principles in Mercurine, in assessing whether the default judgment in that case had been irregularly obtained. Accordingly, the principles in Mercurine apply with equal force to the setting-aside application in this case.

Parties’ Submissions

Both parties agreed that the application to set aside the default judgment is governed by the principles set out in Mercurine. However, they arrived at different conclusions after applying the same principles.

First, the defendant argued that the default judgement was irregularly obtained, as the application for default judgment was taken out prematurely when the SOC did not disclose any reasonable cause of action. On the other hand, the claimant took the position that the default judgment was regularly obtained as the defendant filed his defence out of time.

Second, the defendant submitted that even if the default judgment was regularly obtained, the setting-aside application should be granted, as his defence raises triable issues. In this regard, the defendant pointed out that as the parties never contemplated the creation of any legal relations between them, the existence of a loan or compromise agreement was in issue. Further, the defendant, relying on the inconsistencies in the claimant’s evidence on the terms of the compromise agreement, argued that the alleged terms are uncertain and thus unenforceable.

The claimant objected to the setting-aside application because (a) the defendant’s case was founded upon bare assertions and lacked merit; and (b) the defendant’s delay in making the application was inexcusable. However, during oral submissions, the claimant conceded that the defence discloses triable issues, and instead urged the court to impose a condition for the defendant to provide security of at least S$35,000 for the claimant’s claim, if the setting-aside application is granted.

Issues to be determined

The issues to be determined in this case are as follows: Was the default judgment regularly or irregularly obtained? Should the default judgment be set aside? Is the defence meritorious? Should the setting-aside application be rejected for any other reasons (for example, the defendant’s delay in making the setting-aside application)? Should the defendant be required to provide security for the claimant’s claim if the default judgment is set aside?

Issue 1: Was the default judgment regularly or irregularly obtained?

The defendant in SUM 926 sought to set aside the default judgment on the basis that the judgment was irregularly obtained. The burden therefore fell on him to establish the irregularity, whether factual or legal, failing which the principles governing an application to set aside a regular judgment in default would apply (Mercurine at [98]).

To discharge his burden, the defendant argued that the default judgment was irregularly obtained, as the SOC did not disclose any reasonable cause of action.⁴ According to the defendant, the claimant was impliedly required to file a SOC that disclosed a reasonable cause of action before she was entitled to apply for default judgment under O 6 r 7(7)⁵ (“the implied requirement”). On this interpretation, a breach of the implied requirement resulted in an irregularly obtained default judgment.

In my view, the defendant’s argument is a non-starter. The defendant, in his oral submissions, conceded that the argument finds no basis in law. To begin with, O 6 r 7(7) unambiguously confers upon a claimant the discretion to apply for a default judgment in Form 14,⁶ once the defendant fails to file and serve a defence within the prescribed time, i.e., within 21 days after the SOC is served on the defendant in Singapore (see O 6 r 7(1)). Hence, on a textual interpretation of O 6 r 7(7) (see Tan Cheng Bock v Attorney-General [2017] 2 SLR 850 at [37] for the principles of statutory interpretation), the claimant was entitled to apply for a default judgment without fulfilling the implied requirement.

Neither has any court in Singapore interpreted O 6 r 7(7) to include the implied requirement, and for good reasons. First, the implied requirement is inconsistent with the purpose of O 6 r 7(7) and the Ideals set out in O 3 r 1. As is evident from the provision,⁷ the purpose of O 6 r 7(7) is to avoid wastage of resources, by terminating the case on liability and bringing uncontested proceedings to a conclusion once a defendant fails to comply with the procedural requirements in O 6 r 7(7) (see Jeffrey Pinsler SC, Principles of Civil Procedure (Academy Publishing, 2013) (“Civil Procedure”) at pp 332–333). By allowing a claimant to obtain an administrative outcome based solely on the defendant’s procedural non-compliance, as opposed to securing a judgment on the merits, the mechanism in O 6 r 7(7) achieves the Ideals by ensuring efficient use of resources and expeditious proceedings (see Civil Procedure at p 332 and Lim Quee Choo (suing as co-administratrix of the estate of Koh Jit Meng) and Another v David Rasif and Anor [2008] SGHC 36 (“Lim Quee Choo”) at [89] and [99]).

On the other hand, if the court requires a...