Woon Tek Seng and Another v V Jayaraman a/l V A Vellasamy and Another

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 18 March 2008
• Neutral Citation: [2008] SGHC 38
• Docket Number: District Court Suit No 1245 of 2006
• Date: 18 March 2008
• Published date: 20 March 2008
• Year: 2008
• Plaintiff Counsel: Muthu Kumaran (Bernard & Rada Law Corporation)
• Citation: [2008] SGHC 38
• Defendant Counsel: Suja Michelle Sasidharan (Lim & Lim)
• Court: High Court (Singapore)
• Subject Matter: Automatic discontinuance,Available steps after automatic discontinuance,Whether fresh action per se abuse of process when no prior reinstatement action taken,Whether fresh action abuse of process on basis that same issues litigated previously in discontinued suit,Civil Procedure,Application to strike out recommenced action,Rationale behind automatic discontinuance rules,Whether plaintiffs precluded from bringing fresh action by reason of doctrine of res judicata, issue estoppel or abuse of process,Application for interlocutory judgment on fresh action,Right to commence fresh action after automatic discontinuance,Discontinuance,Whether court should exercise inherent powers to strike out plaintiffs' fresh action,Order 6, O 18 r 19, O 21 r 2(6) Rules of Court (Cap 322, R 5, 2006 Rev Ed)

18 March 2008

Chan Seng Onn J:

Introduction

1 This is an appeal against the decision of District Judge Toh Han Li (“DJ Toh”) which dealt with the principles of court-directed case management and the plaintiffs’ right to recommence a suit that had been deemed discontinued by the Rules of Court (“Rules”).

2 The plaintiffs maintain that they have an absolute right to commence a fresh action notwithstanding the reinstatement procedure under O 21 r 2(8) (see [12]). The 1^st defendant submits that this is an abuse of process, an attempt to bypass the reinstatement procedure and a re-litigation of matters already decided in the action deemed to have been discontinued (“discontinued suit”).

3 In the proceedings below, the Deputy Registrar struck out the plaintiffs’ action on the basis that it was an abuse of process and dismissed the plaintiffs’ application for interlocutory judgment. DJ Toh affirmed the decision of the Deputy Registrar. I allowed the plaintiffs’ appeal against (a) the order striking out the plaintiffs’ action (RAS72/2007/E); and (b) the dismissal of the plaintiffs’ application for interlocutory judgment (RAS71/2007/A).

Brief Facts

4 Woon Tek Seng @ Woon Wee Seng (“1^st plaintiff”), Rahimah Binti Haji Hashim (“2^nd plaintiff”) and V Jayaraman A/L V A Vellasamy (“1^st defendant”) are the shareholders of the 2^nd defendant, Singa Motivasi (M) Sdn Bhd (the “company”). The shares they hold in the company are in the following proportions: 29% (1^st plaintiff), 21% (2^nd plaintiff) and 50% (1^st defendant).

5 It was agreed that the company would purchase a property and the 1^st defendant would contribute 50% of the purchase price which would include payment of mortgage instalments. The company proceeded to purchase the property and obtained financing from a bank. The plaintiffs and the 1^st defendant became the joint and several guarantors for the company for the bank’s mortgage under a written guarantee dated 26 May 1997. When the company defaulted on the mortgage payments, the plaintiffs settled the outstanding amounts with the bank.

6 The plaintiffs then commenced two suits (MC Suit No 28 of 1998 and DC Suit No 50727 of 1999) to recover contribution from the 1^st defendant. The MC Suit was for contribution towards one payment by the plaintiffs. The DC Suit was for further contribution after the plaintiffs made further payments to the bank on the same guarantee. Interlocutory judgments for the MC Suit and DC Suit were obtained on 20 May 1998 and 22 September 1999 respectively for the 1^st defendant’s contribution to be assessed as co-surety under the guarantee. On 22 September 1999, the two suits were consolidated. The assessment under the consolidated suit never took place because the automatic discontinuance rules kicked in subsequently.

7 DJ Toh erred in concluding that the last step in the consolidated suit was on 28 March 2001 when the 1^st defendant withdrew his appeal against the Deputy Registrar’s orders on the plaintiffs’ summons for directions. On a close scrutiny of the court’s records, I found that the last step was in fact taken on 5 September 2003 when the court heard and granted the application by United Merchant Finance Bhd to cease as a party to the consolidated suit. For more than a year thereafter, no remaining party took any further steps in the consolidated suit. Pursuant to O 21 r 2(6), the consolidated suit was deemed discontinued one year later, namely on 6 September 2004. Order 21 r 2(6) to (6B) reads:

(6) Subject to paragraph (6A), if no party to an action or a cause or matter has, for more than one year (or such extended period as the Court may allow under paragraph (6B)), taken any step or proceeding in the action, cause or matter that appears from records maintained by the Court, the action, cause or matter is deemed to have been discontinued.

(6A) Paragraph (6) shall not apply where the action, cause or matter has been stayed pursuant to an order of court.

(6B) The Court may, on an application by any party made before the one year referred to in paragraph (6) has elapsed, extend the time to such extent as it may think fit.

8 The present action was commenced on 31 March 2006, some 1½ years after the deemed discontinuance and 2½ years after the last step. The present claims are substantially the same as those in the discontinued suit, and are for contribution from the 1^st defendant as co-surety for all the sums paid by the plaintiffs to settle the entire amount under the guarantee.

Automatic discontinuance

9 The rationale behind the automatic discontinuance rules was discussed in Tan Kim Seng v Ibrahim Victor Adam [2004] 1 SLR 181. The Court of Appeal said at 184-188 that:

In this connection, we think it is crucial to bear in mind the overall scheme of things under the present Rules of Court. It was put by Lim Hui Min [in her article “Automatic Discontinuance under Order 21 Rule 2, First Dormant, then Dead” published in (2001) 13 S Ac LJ 150] in these terms:

In the course of the last decade, there has been a major shift in the judicial approach towards the control of litigation proceedings, not only in Singapore, but in other parts of the Commonwealth. The emphasis is now on expedition, economy, and the avoidance of delay in litigation. Disputes will no longer be allowed to drag on for years. Towards this end, the courts in Singapore have adopted the practice of case management. Each case is monitored, and if necessary, the court will intervene to ensure that it proceeds expeditiously. If every action has an indefinite life span from the time it is commenced, and if the court is to adhere conscientiously to its case management philosophy, the burden will continually be on the court to conduct case management exercises (such as pre-trial conferences) in order to monitor dormant suits and to find out why they have become dormant. This is arguably an unnecessary and inefficient use of judicial resources. It seems that the court has now found a solution – in the form of the automatic discontinuance provision – to the problem of having to adhere to its case management philosophy on the one hand, and having to husband scarce judicial resources in doing so, on the other. Under the automatic discontinuance regime, no action will have an indefinite life span. Therefore the court’s burden in conducting case management exercises for any one case will be for a finite time-period.

We would only add that the fact that the court takes the initiative of actively conducting case management does not detract from the parties’ obligation to comply with the time-lines set in the Rules of Court. No sufficiently persuasive arguments have been advanced to us to demonstrate why O 21 r 2(6) should no longer apply after interlocutory judgment has been obtained when, quite clearly, further steps are still required to be taken to bring the action to completion. Otherwise, it would mean that a party with the benefit of an interlocutory judgment could let the matter of assessment remain outstanding for an indefinite period, a course which is hardly consonant with the modern approach of requiring civil litigation to proceed expeditiously.

…….

The rationale behind O 21 is the maintenance of an efficient judicial system which requires less policing, with the imposition of drastic consequences for tardy litigants. The approach favoured by Ibrahim would make nonsense of the Rules, which on the one hand encourages the plaintiff to proceed with utmost despatch to interlocutory judgment and yet on the other hand allows the party to procrastinate after that. Until the assessment is completed, the suit is still in the court’s docket as an outstanding case. The case is not over yet. It would be totally out of sync with the scheme of things under the current Rules of Court to say that once a plaintiff obtains an interlocutory judgment on liability, he can thereafter take his time.

….

To our mind O21 r 2(6) would apply to any case where steps are still required to be taken to obtain a judgment which is enforceable.

10 It is settled law that the rules on automatic discontinuance remain applicable to the stage of assessment of damages after interlocutory judgment has been obtained until the action is brought to completion, ending with a judgment that is enforceable. Counsel for both parties rightly acknowledge that on the facts of this case, the consolidated action (for which two interlocutory judgments were obtained prior to consolidation) had been deemed discontinued pursuant to O 21 r 2(6), which is also the status shown in the court records.

Available steps after deemed discontinuance

11 In my judgment, a plaintiff whose action has been deemed discontinued, has basically three choices: (a) apply for reinstatement of the discontinued action and face the stringent criteria governing reinstatement; (b) avoid the stringent criteria for reinstatement and start a fresh action; or (c) take no further action and accept that his action has been discontinued under the Rules. Obviously, where the limitation period is exceeded, the plaintiff can no longer start a fresh action and the only real alternative left, if he wishes to proceed further, is to try for reinstatement, which will be an uphill task.

12 A party whose action has been deemed discontinued may apply to the court to have the action, cause or matter reinstated under O 21 r 2(8), which stipulates that:

Where an action, a cause or a matter has been discontinued under paragraph (5) or (6), the Court may, on application, reinstate the action, cause or matter, and allow it to proceed on such terms as it thinks just. (Note: paragraph (6) is the automatic discontinuance O 21 r 2(6) which is set out at [7].

13 The applicable guidelines governing reinstatement of a discontinued action were set out by Judith Prakash J in Moguntia-Est Epices SA v Sea-Hawk Freight Pte Ltd [2003] 4 SLR 429 (“Moguntia”). In summary, they are as follows:

(a) whether the plaintiff is...