SUPREME COURT OF SINGAPORE
10 July 2024
Case summary
Singapore International Commercial Court Originating Application No 15 of 2023
(Summons No 1 of 2024)
Hii Yii Ann and anor v Tiong Thai King and anor matter [2024] SGHC(I) 21
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Decision of the Singapore International Commercial Court (delivered by Thomas Bathurst IJ):
Outcome: The SICC dismisses the Second Defendant’s application to strike out the First Defendant’s counterclaim against it.
Background
1. SIC/SUM 1/2024 (“SUM 1”) is an application by Everrise Cooperation Pte Ltd (the “Second Defendant”) for the striking out of the entirety of the counterclaim brought against it in the Defence and Counterclaim of the first defendant, Mr Tiong Thai King (the “First Defendant”) dated 15 June 2023 (“Counterclaim”).
2. The Claimants, Mr Hii Yii Ann (“Mr Hii” or the “First Claimant”), and Alliance Lumber (PNG) Limited (the “Second Claimant”) (collectively, the “Claimants”), brought proceedings in the main action, SIC/OA 15/2023, against the First and Second Defendants (the “Defendants”) arising out of a dispute between the Claimants and the Defendants in respect of an agreement dated 3 November 2018 (the “Logging Agreement”).
3. The Logging Agreement provided for the First Defendant to fell and extract logs from an area TP 10-01 in Papua New Guinea. The Logging Agreement provided in effect that the proceeds would be applied to pay an agreed contractor’s fee to the First Defendant and after payment of that amount and various other expenses, the balance was to be paid to a joint venture company established pursuant to the Logging Agreement and paid to the Claimants and the First Defendant in the proportions of 60% and 40%, respectively.
4. The Second Defendant was the joint venture company. The First Claimant, Mr Hii, held 60% of its shares while the First Defendant held 40%. Mr Hii has three nominees (“Mr Hii’s Nominee Directors”) on the Board of Directors (the “Board”), whilst the First Defendant has two (“Mr Tiong’s Nominee Directors”).
5. Two shipments of logs were made pursuant to the Logging Agreement. In respect of the first, the Second Defendant assessed the Claimants’ share of the net proceeds to be US$196,291.28 and the First Defendant’s share to be US$130,860.85. These were paid to the Claimants and the First Defendant in the agreed proportions. The Second Defendant also received the proceeds of the second shipment and assessed the Claimants’ share to be US$155,468.98 and the First Defendant’s to be US$103,645.98.
6. The Claimant’s statement of claim dated 5 June 2023 (“Statement of Claim”) also alleges various breaches of the Logging Agreement by the First Defendant. The Claimants claimed damages from the First Defendant as against the Second Defendant.
7. The Second Defendant did not file a notice of intention to contest or not contest by the stipulated deadline. Accordingly, the Claimants applied on 4 January 2023 for a judgment in default of notice of intention to contest or not contest, in respect of its claim against the Second Defendant, which was granted on 10 March 2023 vide HC/JUD 85/2023 (the “default judgment”).
8. The First Defendant brought a counterclaim against the Claimants and the Second Defendant. As originally filed, the First Defendant’s Counterclaim simply asserted, that the failure of the Second Defendant to pay the sum of US$103,645.98 to the First Defendant constituted a breach of the Logging Agreement.
9. In the amended Counterclaim filed on 15 June 2023, it was pleaded in addition that the refusal by the Second Defendant to pay the sum of US $103,645.98 to the First Defendant constituted a breach of trust. It also pleaded that the First Claimant dishonestly assisted the Second Defendant to act in breach of trust. It also asserted as an alternative that the First Claimant induced the Second Defendant to breach its contractual obligations to the First Defendant.
The Dispute in SUM 1
10. The Second Defendant applies vide SUM 1 to strike out the First Defendant’s Counterclaim under Order 16 rule 4 of the Singapore International Commercial Court Rules 2021 (“SICC Rules”).
11. The Second Defendant relies heavily on an email dated 28 December 2022 (the “Email”) from the First Defendant’s nominee director on the Board of the Second Defendant, to the Claimant’s nominee director, which stated that “Regarding the suit against Everrise Cooperation Pte Ltd in which the [First Claimant] through his nominees have the majority stake, we will just leave it in your good hands.”
12. In essence, the Second Defendant’s case was that the First Defendant had been notified of the claim and had ample opportunity to assist the Court in resolving the issues surrounding the US$103,645.98 and/or to stake its claim but failed to do so. The Second Defendant contended, among others, that:
a. it is unequivocal that the default judgment finally dealt with and disposed of the issues of the parties’ obligations under the Logging Agreement;
b. the extended doctrine of res judicata applies; and that
c. the First Defendant ought to have had recourse to what was described as the established remedy of a derivative action pursuant to s 216A of the Companies Act 1967 (2020 Rev Ed) (“Companies Act”).
13. The First Defendant submitted, among others, that:
a. the default judgment did not give rise to any form of estoppel, whether cause of action or issue estoppel which would prevent the First Defendant from pursuing the Counterclaim; and
b. nothing could be made of the First Defendant’s decision not to make an application under s 216A of the Companies Act
The court’s decision
14. In the circumstances, the Email could not be construed as authorising the majority directors of the Second Defendant to deal with the action brought against it as they thought fit including not defending it. Accordingly, the Second Defendant’s contention on this point must fail (at [55] to [58]).
15. It was not entirely clear whether the Second Defendant is relying on cause of action estoppel, issue estoppel or both. However, the First Defendant was not a party to the default judgment and appears to have had no notification that it was being sought. It is therefore inconceivable that the default judgment was a final or conclusive judgment against the First Defendant as there was no identity of parties (at [58] to [62]).
16. In relation to the extended doctrine of res judicata, there was no force in the argument because it could not be established that that the First Defendant agreed or acquiesced in the Second Defendant not defending the claim (at [64]).
17. In relation to the Second Defendant’s arguments based on s 216A of the Companies Act, there is no reason why the First Defendant should be compelled to bring that application as distinct from seeking to enforce his personal rights. If the First Defendant had made an application under s 216A for an order that he be entitled to defend the Claimants’ claim in the name of the Second Defendant, that would not be inconsistent with asserting his personal rights (at [65]).
18. In the circumstances, the SICC dismissed SUM 1 with costs payable by the Second Defendant to the First Defendant (at [66]).
This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.