Wishing Star Ltd v Jurong Town Corporation

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 31 March 2004
• Neutral Citation: [2004] SGCA 14
• Citation: [2004] SGCA 14
• Date: 31 March 2004
• Year: 2004
• Plaintiff Counsel: Ho Chien Mien and J Sathia (Allen and Gledhill)
• Docket Number: Civil Appeal No 126 of 2003
• Defendant Counsel: Edmund Kronenburg and Celina Chua (Drew and Napier LLC)
• Court: Court of Appeal (Singapore)
• Published date: 05 April 2004

31 March 2004

Chao Hick Tin JA (delivering the judgment of the court):

1 This was an appeal against a decision of the High Court (reported at [2004] 1 SLR 1) refusing the application of the defendant-appellant, Jurong Town Corporation (“JTC”), for the plaintiff-respondent, Wishing Star Limited (“WSL”), to furnish security for costs in the sum of $400,000 in respect of the action. We dismissed the appeal. For the purposes of the appeal, JTC also sought, by way of a motion, the admission of certain fresh evidence. We disallowed that too. We now give our reasons.

The background

2 WSL, a construction company incorporated in Hong Kong, is engaged in the business of manufacturing and constructing curtain walls for buildings. JTC is a statutory board established under an Act of Parliament. On 14 June 2002, JTC awarded WSL a contract in respect of the façade works for seven tower blocks at the JTC Multi-User Biomedical Research and Development Complex at North Buona Vista Drive (“the Biopolis Project” or “the project”) pursuant to a tender submitted by WSL. The value of this contract was some $54m. Indeed, in accordance with the terms of the contract, WSL started work on the project on 23 May 2002 even though the formal award was only made on 14 June 2002.

3 On 9 September 2002, JTC terminated the contract on the main ground that WSL had made material misrepresentations in its tender submission.

4 On 13 January 2003, WSL commenced the present action against JTC claiming, inter alia, payment for work done and damages for the wrongful termination of the contract. In the alternative, WSL claimed on a quantum meruit. In its defence, JTC pleaded that it had lawfully rescinded the contract and, instead, counterclaimed for certain damages which it had suffered. The trial of the action and the counterclaim are now part-heard in the High Court.

5 After the pleadings were closed, various interlocutory issues arose eg, the obtaining of further and better particulars and discovery, which resulted in several applications being made to court.

6 In the meantime, on 7 April 2003, pursuant to a summons for directions, the Registrar set the date for the trial of the action and counterclaim to commence on 3 November 2002 and it was to continue until 28 November 2003. No question of security for costs was raised by JTC.

7 It was only on 6 August 2003 that JTC’s solicitors wrote to WSL’s solicitors asking for security for costs in the sum of $400,000. In response to a request from WSL as to the basis of the demand, JTC furnished the following grounds:

(a) WSL was ordinarily resident out of the jurisdiction;

(b) it was believed that WSL did not own fixed and permanent assets in Singapore; and

(c) it was believed that WSL did not own fixed and permanent assets in Hong Kong either, its place of incorporation.

8 This request for security was resisted by WSL, saying that it had a registered office here and was therefore not ordinarily resident out of Singapore. WSL did not give any information regarding its assets either in Singapore or Hong Kong.

9 On 15 August 2003, JTC made a formal application for security in the sum of $400,000. Upon its dismissal by the assistant registrar, an appeal was lodged to a judge in chambers who, in turn, also dismissed it on 28 October 2003. On 6 November 2003, JTC lodged its appeal to the Court of Appeal. In the meantime, on 5 November 2003, the trial of the action commenced before the High Court and the hearing was adjourned on 13 November 2003. The resumed hearing is now scheduled to start on 5 April 2004.

10 Before the assistant registrar and the judge, one of the contested issues was whether WSL could be considered to be ordinarily resident out of the jurisdiction when it has a branch office here which is registered under our Companies Act. On this point, both the assistant registrar and the judge held against WSL, who no longer pursued it in its Case before us.

11 In deciding not to order security for costs, the judge took into account the following main considerations:

(a) WSL was a reputable Hong Kong company with business interests in Singapore and there was no reason to suppose that such a company would not pay its costs if ordered to do so;

(b) there was reciprocal enforcement of judgments between Singapore and Hong Kong; and

(c) the application for security for costs was made too late and the quantum was too large.

The law

12 The application by JTC for security was made pursuant to O 23 r 1(1)(a) of the Rules of Court (Cap 322, R 5, 1997 Rev Ed) (“r 1(1)(a)”) which reads:

Where, on the application of a defendant to an action or other proceeding in the Court, it appears to the Court that the plaintiff is ordinarily resident out of the jurisdiction, then, if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceeding as it thinks just.

13 JTC argued that following from this provision, once it is shown that WSL is ordinarily resident out of jurisdiction and has no assets of a fixed nature within jurisdiction, security for costs should normally be awarded unless it is shown to be unjust, having regard to all the circumstances.

14 It is settled law that it is not an inflexible or rigid rule that a plaintiff resident abroad should provide security for costs. The court has a complete discretion in the matter: see Keary Developments Ltd v Tarmac Construction Ltd[1995] 3 All ER 534. It seems to us that under r 1(1)(a), once the pre-condition, namely, being “ordinarily resident out of the jurisdiction”, is satisfied, the court will consider all the circumstances to determine whether it is just that security should be ordered. There is no presumption in favour of, or against, a grant. The ultimate decision is in the discretion of the court, after balancing the competing factors. No objective criteria can ever be laid down as to the weight any particular factor should be accorded. It would depend on the fact situation. Where the court is of the view that the circumstances are evenly balanced it would ordinarily be just to order security against a foreign plaintiff.

15 We are fortified in this view by the comments of Browne-Wilkinson V-C in Porzelack KG v Porzelack (UK) Ltd[1987] 1 All ER 1074 at 1077 on the identical English provision:

Under Ord 23, r 1(1)(a) it seems to me that I have an entirely general discretion either to award or refuse security, having regard to all the circumstances of the case. However, it is clear on the authorities that, if other matters are equal, it is normally just to exercise that discretion by ordering security against a non-resident plaintiff. The question is what, in all the circumstances of the case, is the just answer.

Our assessment

16 In our opinion, in the context of this case, two critical factors weigh heavily in favour of WSL. First is the delay in JTC taking out the application. Second, the counterclaim of JTC is based entirely on its defence to the claim of WSL.

17 It would be recalled that this action was commenced on 13 January 2003. JTC was obviously not concerned with the fact that WSL is a foreign company when it took various steps in the proceedings, including the filing of pleadings and further particulars and the discovery of documents. The trial was fixed to be heard commencing 3 November 2003 at the summons for directions hearing on 7 April 2003. There was not a squeak then that JTC was concerned about its costs in defending the action.

18 According to JTC, it only instructed an investigative agency, Pinkerton (Hong Kong) Ltd (“Pinkerton”), to look into the assets of WSL in July 2003. Pinkerton submitted its report in early August 2003....