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JurongTownCorpvWishingStarLtd[2004]SGCA14

JurongTownCorpvWishingStarLtd
[2004]2SLR427[2004]SGCA14
SuitNo : CA126/2003
Decision
: 31Mar2004
Date
Court
: CourtofAppeal
Coram : ChaoHickTinJA,LaiSiuChiuJ
HoChienMienandJSathia(AllenandGledhill)forappellants,Edmund
Counsel :
KronenburgandCelinaChua(DrewandNapierLLC)forrespondents
CivilProcedureCostsSecurityPlaintiffordinarilyresidentoutofjurisdictionRelevantfactorstoconsiderin
court'sexerciseofdiscretionOrder23r1(1)(a)RulesofCourt(Cap322,R5,1997RevEd)
CivilProcedureAppealsInterlocutoryappealsWhethercourthasdiscretiontoallowadmissionoffurther
evidenceWhetherLaddvMarshallprinciplesapplicableOrder57r13(2)RulesofCourt(Cap322,R5,1997
RevEd)
Top
[EditorialNote:AppealdismissedbytheCourtofAppealon26February2004]
Facts
Theappellant(JTC)awardedtherespondent(WSL),aconstructioncompanyincorporatedinHongKong,a
$54mcontractinrespectofamajorconstructionproject.JTCsubsequentlyterminatedthecontractallegingthat
WSLhadmadematerialmisrepresentationsinitstendersubmission.WSLcommencedlegalproceedingsagainst
JTCforthewrongfulterminationofthecontract.JTCclaimedthatithadlawfullyrescindedthecontractand
counterclaimedfordamagessuffered.
Afterthetrialdateshadbeensetdown,JTCappliedforsecurityforcosts.Theassistantregistrardismissed
JTCsapplicationandtheHighCourtjudgeaffirmedherdecisiononappeal.Thejudgeconsideredthefollowing
facts:therewasnoreasontosupposethatWSL,areputableHongKongcompany,wouldnotpayitscostsif
orderedtodosotherewasreciprocalenforcementofjudgementsbetweenSingaporeandHongKongthe
applicationforsecurityforcostswasmadetoolateandthequantumdemandedtoolarge.JTCappealedandalso
soughttoadmittranscriptsofthecrossexaminationofWSLsmanagingdirector.
Held,dismissingtheappealanddenyingthemotion:
(1)OncethepreconditionunderO23r1(1)(a)oftheRulesofCourt(Cap322,R5)ordinarilyresidentoutof
Singaporewassatisfied,thecourtwouldconsiderallthecircumstancestodeterminewhetheritwasjustthat
securityshouldbeordered.Therewasnopresumptioninfavourof,oragainst,agrant
ofsecurity.Theultimatedecisionwaswithinthediscretionofthecourt,afterbalancingthecompetingfactors:at
[14]and[15].
(2)TwocriticalfactorsweighedheavilyinfavourofWSL.First,JTConlymadeitsapplicationaftervarious
stepsintheproceedingshadalreadybeentaken,andsubstantialworkhadbeendonebythesolicitors.Second,
JTCsCounterclaimwasbasedentirelyonitsdefencetoWSLsclaim.Grantingsecuritycouldamountto
indirectlyaidingJTCinpursuingitsCounterclaim:at[16]to[21].

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(3)AlthoughWSLdidnothavemeaningfulassetsinSingaporeandHongKong,andtherewouldbedifficulties
inenforcingajudgmentinChinawheremostofWSLsassetswere,theseconsiderationshadtobebalanced
againsttheabovetwofactors.Itwouldnotbejustinthecircumstancestoordersecurity:at[23].
(4)Thejudgesobservation,thattherewerenogroundstobelievethatWSLwouldnotpaythecostsshouldit
losethecase,wasaneutralpointwhichwasnotarelevantfactorinthebalancingexercise.Ifitcouldbeshown
byobjectivefactsthatWSLwouldnotbelikelytopaythecosts,thatwouldberelevant,buttherewasnothing
heretoindicatewhetherWSLwouldorwouldnotpay:at[22].
(5)ThestrictprinciplesinLaddvMarshalldidnotapplyinthisinterlocutoryappeal.Howeverthecourtstillhad
thediscretiontodisallowtheadmissionoffreshevidence.Inthissituation,examinationofWSLsmanaging
directorwasnotcompletedanditwasprematureforthecourttoreachanyconclusiononsuchpartialevidence.
Inanyevent,theevidencewouldhardlybeofanysignificance:at[27]to[29].
Case(s)referredto
BJCrabtree(Insulation)LtdvGPTCommunicationsLtd[1990]50BLR43(folld)
ElectraPrivateEquityPartnersvKPMGPeatMarwick[2001]1BCLC589(folld)
HutchisonTelephone(UK)LtdvUltimateResponseLtd[1993]BCLC307(folld)
KearyDevelopmentsLtdvTarmacConstructionLtd[1995]3AllER534(folld)
LaddvMarshall[1954]1WLR1489(refd)
PorzelackKGvPorzelack(UK)Ltd[1987]1AllER1074(folld)
Legislationreferredto
RulesofCourt(Cap322,R5,1997RevEd)O23r1(1)(a),O57r13(2)
[Editorialnote:TheHighCourtdecisionfromwhichthisappealaroseisreportedat[2004]1SLR1.]
Top
31March2004
ChaoHickTinJA(deliveringthejudgmentofthecourt):
1ThiswasanappealagainstadecisionoftheHighCourt(reportedat[2004]1SLR1)refusingthe
applicationofthedefendantappellant,JurongTownCorporation(JTC),fortheplaintiffrespondent,WishingStar
Limited(WSL),tofurnishsecurityforcostsinthesumof$400,000inrespectoftheaction.Wedismissedthe
appeal.Forthepurposesoftheappeal,JTCalsosought,bywayofamotion,theadmissionofcertainfresh
evidence.Wedisallowedthattoo.Wenowgiveourreasons.
Thebackground
2WSL,aconstructioncompanyincorporatedinHongKong,isengagedinthebusinessofmanufacturingand
constructingcurtainwallsforbuildings.JTCisastatutoryboardestablishedunderanActofParliament.On
14June2002,JTCawardedWSLacontractinrespectofthefaadeworksforseventowerblocksattheJTC
MultiUserBiomedicalResearchandDevelopmentComplexatNorthBuonaVistaDrive(theBiopolisProjector
theproject)pursuanttoatendersubmittedbyWSL.Thevalueofthiscontractwassome$54m.Indeed,in
accordancewiththetermsofthecontract,WSLstartedworkontheprojecton23May2002eventhoughthe
formalawardwasonlymadeon14June2002.
3On9September2002,JTCterminatedthecontractonthemaingroundthatWSLhadmadematerial
misrepresentationsinitstendersubmission.
4On13January2003,WSLcommencedthepresentactionagainstJTCclaiming,interalia,paymentfor
workdoneanddamagesforthewrongfulterminationofthecontract.Inthealternative,WSLclaimedona
quantummeruit.Initsdefence,JTCpleadedthatithadlawfullyrescindedthecontractand,instead,
counterclaimedforcertaindamageswhichithadsuffered.Thetrialoftheactionandthecounterclaimarenow
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partheardintheHighCourt.
5Afterthepleadingswereclosed,variousinterlocutoryissuesaroseeg,theobtainingoffurtherandbetter
particularsanddiscovery,whichresultedinseveralapplicationsbeingmadetocourt.
6Inthemeantime,on7April2003,pursuanttoasummonsfordirections,theRegistrarsetthedateforthe
trialoftheactionandcounterclaimtocommenceon3November2002anditwastocontinueuntil28November
2003.NoquestionofsecurityforcostswasraisedbyJTC.
7Itwasonlyon6August2003thatJTCssolicitorswrotetoWSLssolicitorsaskingforsecurityforcostsin
thesumof$400,000.InresponsetoarequestfromWSLastothebasisofthedemand,JTCfurnishedthe
followinggrounds:
(a)WSLwasordinarilyresidentoutofthejurisdiction
(b)itwasbelievedthatWSLdidnotownfixedandpermanentassetsinSingaporeand
(c)itwasbelievedthatWSLdidnotownfixedandpermanentassetsinHongKongeither,itsplaceof
incorporation.
8ThisrequestforsecuritywasresistedbyWSL,sayingthatithadaregisteredofficehereandwastherefore
notordinarilyresidentoutofSingapore.WSLdidnotgiveanyinformationregardingitsassetseitherinSingapore
orHongKong.
9On15August2003,JTCmadeaformalapplicationforsecurityinthesumof$400,000.Uponitsdismissal
bytheassistantregistrar,anappealwaslodgedtoajudgeinchamberswho,inturn,alsodismissediton
28October2003.On6November2003,JTClodgeditsappealtotheCourtofAppeal.Inthemeantime,on
5November2003,thetrialoftheactioncommencedbeforetheHighCourtandthehearingwasadjournedon
13November2003.Theresumedhearingisnowscheduledtostarton5April2004.
10Beforetheassistantregistrarandthejudge,oneofthecontestedissueswaswhetherWSLcouldbe
consideredtobeordinarilyresidentoutofthejurisdictionwhenithasabranchofficeherewhichisregistered
underourCompaniesAct.Onthispoint,boththeassistantregistrarandthejudgeheldagainstWSL,whono
longerpursueditinitsCasebeforeus.
11Indecidingnottoordersecurityforcosts,thejudgetookintoaccountthefollowingmainconsiderations:
(a)WSLwasareputableHongKongcompanywithbusinessinterestsinSingaporeandtherewasnoreasonto
supposethatsuchacompanywouldnotpayitscostsiforderedtodoso
(b)therewasreciprocalenforcementofjudgmentsbetweenSingaporeandHongKongand
(c)theapplicationforsecurityforcostswasmadetoolateandthequantumwastoolarge.
Thelaw
12TheapplicationbyJTCforsecuritywasmadepursuanttoO23r1(1)(a)oftheRulesofCourt(Cap322,
R5,1997RevEd)(r1(1)(a))whichreads:
Where,ontheapplicationofadefendanttoanactionorotherproceedingintheCourt,itappearstotheCourtthat
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theplaintiffisordinarilyresidentoutofthejurisdiction,then,if,havingregardtoallthecircumstancesofthe
case,theCourtthinksitjusttodoso,itmayordertheplaintifftogivesuchsecurityforthedefendantscostsof
theactionorotherproceedingasitthinksjust.
13JTCarguedthatfollowingfromthisprovision,onceitisshownthatWSLisordinarilyresidentoutof
jurisdictionandhasnoassetsofafixednaturewithinjurisdiction,securityforcostsshouldnormallybeawarded
unlessitisshowntobeunjust,havingregardtoallthecircumstances.
14Itissettledlawthatitisnotaninflexibleorrigidrulethataplaintiffresidentabroadshouldprovidesecurity
forcosts.Thecourthasacompletediscretioninthematter:seeKearyDevelopmentsLtdvTarmacConstruction
Ltd[1995]3AllER534.Itseemstousthatunderr1(1)(a),oncetheprecondition,namely,beingordinarily
residentoutofthejurisdiction,issatisfied,thecourtwillconsiderallthecircumstancestodeterminewhetherit
isjustthatsecurityshouldbeordered.Thereisnopresumptioninfavourof,oragainst,agrant.Theultimate
decisionisinthediscretionofthecourt,afterbalancingthecompetingfactors.Noobjectivecriteriacaneverbe
laiddownastotheweightanyparticularfactorshouldbeaccorded.Itwoulddependonthefactsituation.Where
thecourtisoftheviewthatthecircumstancesareevenlybalanceditwouldordinarilybejusttoordersecurity
againstaforeignplaintiff.
15WearefortifiedinthisviewbythecommentsofBrowneWilkinsonVCinPorzelackKGvPorzelack(UK)
Ltd[1987]1AllER1074at1077ontheidenticalEnglishprovision:
UnderOrd23,r1(1)(a)itseemstomethatIhaveanentirelygeneraldiscretioneithertoawardorrefusesecurity,
havingregardtoallthecircumstancesofthecase.However,itisclearontheauthoritiesthat,ifothermattersare
equal,itisnormallyjusttoexercisethatdiscretionbyorderingsecurityagainstanonresidentplaintiff.The
questioniswhat,inallthecircumstancesofthecase,isthejustanswer.
Ourassessment
16Inouropinion,inthecontextofthiscase,twocriticalfactorsweighheavilyinfavourofWSL.Firstisthe
delayinJTCtakingouttheapplication.Second,thecounterclaimofJTCisbasedentirelyonitsdefencetothe
claimofWSL.
17Itwouldberecalledthatthisactionwascommencedon13January2003.JTCwasobviouslynot
concernedwiththefactthatWSLisaforeigncompanywhenittookvariousstepsintheproceedings,including
thefilingofpleadingsandfurtherparticularsandthediscoveryofdocuments.Thetrialwasfixedtobeheard
commencing3November2003atthesummonsfordirectionshearingon7April2003.Therewasnotasqueak
thenthatJTCwasconcernedaboutitscostsindefendingtheaction.
18AccordingtoJTC,itonlyinstructedaninvestigativeagency,Pinkerton(HongKong)Ltd(Pinkerton),to
lookintotheassetsofWSLinJuly2003.PinkertonsubmitteditsreportinearlyAugust2003.Thereafter,on
6August2003,JTCwrotetoWSLaskingforsecurity.Bythensubstantialworkhadalreadybeenundertakenby
thesolicitorsofbothparties.
19Next,itisundeniablethatJTCsdefencetotheclaimanditscounterclaimarelaunchedfromthesame
platform.Thetimeandworkrequiredforthetrialofthecounterclaimwouldbesubstantiallythesame,whetheror
nottheclaimofWSLisstayed.Inshort,nosignificantadditionalcostswouldbeincurredbyJTCifwewereto
allowtheactiontoproceed.Insuchcircumstances,wewereunabletoseewhatpurposeitwouldserveinstaying
theactionofWSL.Costsincurredindefendingtheactioncouldberegardedascostsnecessarytoprosecutethe
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counterclaim.Indeed,grantingsecurityinthissituationcouldamounttoindirectlyaidingJTCtopursueits
counterclaim.
20Thisisafactorwhichcouldbetakenintoaccountandissupportedbyauthorities.InBJCrabtree
(Insulation)LtdvGPTCommunicationSystemsLtd(1990)59BLR43,acaseundertheUKCompaniesAct
1985,theEnglishCourtofAppeal,inreversingthedecisionofthecourtbelow,emphasisedthattherecanbeno
ruleofthumbastothegrantorrefusalofanorderforsecurity.AmongthereasonsadvancedbyBinghamLJto
refuseanorderforsecuritywasthis(at53):
Iampersuadedthatitwouldbewrongtodosoherebecausethecoststhatthesedefendantsareincurringto
defendthemselvesmayequally,andperhapspreferably,beregardedascostsnecessarytoprosecutetheir
counterclaim.
21Anothercasewhichshowedthatsuchoverlappingclaimscouldbetakenintoaccountasafactorinnot
orderingsecurityisHutchisonTelephone(UK)LtdvUltimateResponseLtd[1993]BCLC307,althoughthefact
situationtherewasthereverse.There,theplaintiffappliedforsecurityforcoststodefendthedefendants
counterclaim.Thecourttheredeclaredthatifsecuritywereawardedinacasewherethedefendants
counterclaimwasessentiallyakintohisdefencetotheplaintiffsclaim,thecourtwouldbeindirectlygranting
coststoaidtheplaintiffinadvancinghisinitialclaim.However,inHutchinson,thecourtgrantedsecuritytothe
plaintifftodefendthecounterclaimbecauseitheldthatthecounterclaimwasquitedistinctfromthedefenceto
theclaim.
Intentiontopay
22Atthisjuncture,wewouldrefertotheobservationofthejudgethattherewerenogroundstobelievethat
WSLwouldnotpaythecostsshouldWSLlosethecase.CounselforJTCarguedthattothrustthisburdenon
JTCwasunjust.However,itisimportanttobearinmindhowthisobservationarose.JTCscounselhad
submittedthatCrabtreewasdistinguishablebecausetheplaintiffinCrabtreewasimpecunious,butnotsointhe
presentcase.Itwasinresponsetocounselssubmissionthatthejudgenotedthatthepointresolveditselfinto
whethertherewasanyreasontosupposethattheplaintiffwouldnotpayintheeventthatitshouldfailinits
claimandlosethecounterclaim.ThejudgealsonotedthatJTCseemedtobeblowinghotandcoldwhenit
suggestedthatWSLcouldwellbeunabletopay.Inabilitytopayisofcoursedifferentfromhavinganintention
nottopay.IfitcouldbeshownbyobjectivefactsthatWSLwouldnotbelikelytopaythecosts,thatwouldbea
relevantfactorfortheconsiderationofthecourt.Butinthecontextofthiscase,therewasreallynothingto
indicatewhetherWSLwouldorwouldnotpayifitshouldlosetheaction.Thatbeingtheposition,itwasreallya
neutralpointandwasnotafactorwhichwasrelevanttothebalancingexercise.Tothisextent,wewould
respectfullydifferfromthejudge.
Wherethebalancelies
23WerecognisedthatWSLdidnothaveanymeaningfulassetsinSingaporeotherthanholdinga55%share
inacompanyinSingaporewithapaidupcapitalof$10,000.NeitherwasitshownthatWSLhadanysubstantial
assetsinHongKong,itsplaceofincorporation.Thus,therecouldwellbedifficultiesinenforcingaSingapore
judgmentoncostsinChinawhereWSLhasmostofitsassets.Theseare,nodoubt,factorsontheothersideof
thescale.Butbalancingtheseagainstthetwofactorsmentionedabove,namely,latenessintheapplicationand
theoverlapbetweentheclaimandthecounterclaim,andtheirconsequenteffects,wehadnohesitationatallin
concludingthatthesituationfavouredtherefusalofanysecurityforcosts.Itwouldnotbejusttomaketheorder.
24Thejudgealsoreferredtothefactthattheamountrequestedforsecuritywasverylarge.Ofcourse,the
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courtisnotboundtogranttheamountaskedfor.Itcouldgrantalesseramount.However,ifduetotheweightof
thefactorsontheothersideofthescale,theamountthatoughttobegivenisgreatlyreduced,thiswouldbea
factorwhichthecourtcouldnodoubtconsiderindeterminingwhetheritisatallmeaningfultograntsecurity.
Freshevidence
25Wenowturntotheapplicationinthemotiontointroducefreshevidencewhichwehaddisallowed.Itwould
berecalledthattrialoftheactionhadcommencedon3November2003andisnowpartheard.Thefresh
evidencewhichJTCsoughttoadmitwastheevidencegivenatthetrialbyWSLsmanagingdirector,MsCarol
Wen,duringcrossexaminationwhereshewasallegedtohaveadmittedthatWSLwasbeingdishonest.The
allegeddishonestywasinrespectofthefollowingwhichwequotefromJTCswrittensubmission:
(a)CarolWenadmittingthatWSLhadliedtoJTCsconsultantson10May2002abouthavingengaged15
designerswheninfactWSLhadnotengagedthem.
(b)CarolWenadmittingthatWSLhad,on23May2002,roundeduppeoplewhowerenotdesigners(including4
fromatemporaryemploymentagency)topretendtobepartofWSLsdesignstaff.ThisistofoolNickChang,
PrincipalArchitectofJTCsconsultants,whohadaskedforameetingatWSLsofficestoverifyWSLstotal
designstaff.
(c)CarolWenadmittingthatalthoughshesubsequentlyfoundoutaboutthedeceptionbeingperpetratedon
JTCsconsultantsbutbeforetheawardofthesubcontractshedidnotdothehonestthingbyowningupto
thedeceptiontoJTCsconsultants.
26Followingfromthisadmissionofdishonesty,JTCsubmittedthatWSLwastherebyunlikelytohonourany
costsorderthatmightbemadeagainstWSL.JTCarguedthatthisevidencewouldbegermanetothe
observationmadebythejudge(at[6]):
Allusionswerealsomade,hintingthattheplaintiffswerenothonestandthereforeunlikelytohonouranycourt
orderastocosts.However,Iwasunabletobefullyconvincedthatthiswouldbethecase.Theplaintiffsare,
afterall,areputableHongKongcompanywithbusinessinterestsinSingaporeandtherewasnoreasonto
supposethatacompanylikethatwouldnotpayitscostsiforderedtodoso.
27ThisapplicationbyJTCwasmadepursuanttothepowerconferredonthiscourtunderO57r13(2)ofthe
RulesofCourt.Asthepresentappealwasnotoneagainstajudgmentaftertrialorhearingofanycauseor
matteronthemerits,itwasclearthatthiscourtwasentitled,ifitthoughtitappropriate,toadmitthefresh
evidence.ThestrictprinciplesinLaddvMarshall[1954]1WLR1489wouldnotbeapplicable.Butthisisnotto
saythatinsuchanappealapartyisentitledasofrighttohavethefreshmatteradmitted.Thediscretionrests
withthecourt.Thecourtshouldguardagainstattemptsbyadisappointedpartyseekingtoretrievelostgroundin
interlocutoryappealsbyrelyingonevidencewhichhecouldorshouldhaveputbeforethecourtbelow:see
ElectraPrivateEquityPartnersvKPMGPeatMarwick[2001]1BCLC589at620.
28WewouldfirstobservethattheexaminationofCarolWenatthetrialisnotcompleted.Shewillbere
examinedbycounselforWSLwhenthetrialresumes.Itwouldbeprematureforthiscourttoreachany
conclusiononthepoint.Itwouldbeinappropriateforustocometoanyconclusionbasedonpartialevidence.
Indeed,itcouldevenbeprejudicialasthatwouldbeapointwhichthetrialjudgewillhavetomakeafindinginthe
lightofalltheevidenceadducedbeforehim.Wedidnothavealltheevidence.Neitherdidwewishtousurpthe
functionofthetrialjudge.
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29Inanyevent,theeffectofthisevidenceinrelationtotheappealwouldhardlybeofanysignificance.Even
assumingthatWSLdidmakethemisrepresentationasregardsthe15designstaff,wedidnotthinkitwould
necessarilyfollowthatWSLwouldnotbewillingtopaythecostsifitshouldfailintheaction.Itwillbeforthetrial
judgetoassessthereasonsadvancedforthemisrepresentation.
Appealdismissed.Motiondenied.
ReportedbyDorcasQuekErnLing

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