Madihill Development Sdn Bhd and another v Sinesinga Sdn Bhd (transferee to part of the assets of United Merchant Finance Bhd)

Quentin Loh:

[2] RT failed in his application on 27 June 2011 to set aside the Order of Court dated 18 February 2011 and appealed. I dismissed the appeal on 1 August 2011 and RT has appealed against my decision.

[3] A chronology would be helpful:

[4] RT’s appeal is based on a short point. At the time the Malaysian judgment was registered under RECJA, there was an incurable defect as there was a pending appeal before the Malaysian Court of Appeal. Section 3(2)(e) reads:

RT characterised this as a strict legislative prohibition against registration of a foreign judgment so long as an appeal or a right and intention to appeal is extant. The application was therefore wrong from the outset and had to be set aside.

[5] SSB relies on s 3(1) as well as case law. Section 3(1) states:

SSB further contends that there is no longer any pending appeal as RT has exhausted all avenues of appeal in Malaysia and it is therefore just and convenient to dismiss RT’s application and to allow the 18 February 2010 registration of the Malaysian judgment to stand.

[6] Mr Fan Kin Ning (“Mr Fan”), counsel for RT, did not produce any authorities and only relied on the statutory provisions and what he contended was the proper construction. Mr Chua Beng Chye (“Mr Chua”), counsel for SSB, relied on four cases for his argument that RT’s construction of ss 3(1) and (2) was wrong. Strictly speaking, none of the authorities relied on by Mr Chua were applicable or relevant on their facts.

[7] In the first case, Perwira Ariffin Bank Bhd (formerly known as Perwira Habib Bank Malaysia Bhd) v Lee Hai Pey and another [1997] 2 SLR(R) 498 (“Perwira Ariffin Bank”), a bank had obtained summary judgment in September 1998 in Malaysia against its borrower company and the individual guarantors. The successive appeals were dismissed in October 1990 and in November 1994. On 28 October 1996, the plaintiff applied ex parte to register the Malaysian judgment in Singapore under the RECJA. The guarantor applied to set the Singapore judgment aside on the ground that the Malaysian judgment was no longer enforceable as more than 6 years had passed since the Malaysian judgment was issued. The bank thereupon successfully applied in Malaysia, ex parte, on 23 May 1996 for leave to enforce the Malaysian judgment. With the Malaysian court order in hand, the bank applied afresh to register the Malaysian judgment. On 30 December 1996, the borrower company successfully set aside the Malaysian court order granting leave to enforce the judgment but the guarantor was unsuccessful. The bank and the guarantor filed appeals. The guarantor then applied to set aside the registration of the Malaysian judgment in Singapore pending the determination of the enforceability of the Malaysian judgment by the Malaysian appeal court. His application before the registrar failed and he appealed. On appeal, Warren L H Khoo J held that since the Malaysian judgment before him ceased to be enforceable unless leave of court was obtained, and leave had been obtained ex parte and confirmed by an inter partes hearing, the defendant was entitled to appeal against that decision and had done so. He therefore ordered a stay, pending the outcome of the appeal, as there was no telling which way the judgment will go on appeal.

[8] Mr Chua submitted that a pending appeal in the Malaysian court did not prevent the registration of the Malaysian judgment in Singapore, citing Perwira Ariffin Bank at [10]:

That paragraph must be read in the context of the factual matrix. The judgment establishing the debt in that case was no longer under appeal. What was under appeal was the order of the Malaysian court granting leave to enforce a judgment after the passage of more than six years after its publication. Section 3(2)(e) therefore was not in issue. In that context, what was before the learned judge was the s 3(1) requirement as to whether in all the circumstances it was just and convenient that the judgment be allowed to be enforced in Singapore. The learned judge cannot be said to have read s 3(2) as subordinate to s 3(1)’s requirements. Perwira Ariffin Bank therefore does not really answer RT’s contention.

[9] The second case relied upon by Mr Chua, Perwira Affin Bank Bhd (formerly known as Perwira Habib Bank Malaysia Bhd) v Lee Hai Pey and another [2007] 3 SLR(R) 218, involved the same parties. By now, the appeals against the enforceability of the Malaysian judgment had come to an end. Judith Prakash J held that Khoo J had stayed enforcement as there were appeals pending and since those appeals had been finally dealt with, it was just and convenient to allow the Malaysian judgment to be enforced despite the long delays which had resulted from the guarantors’ utilisation of his right of appeal and not any dilatoriness by the bank. There is nothing in this judgment that assists SSB’s case.

[10] The third case cited by Mr Chua is the Singapore Court of Appeal’s decision in Liao Eng Kiat v Burswood Nominees Ltd [2004] 4 SLR(R) 690 (“Burswood Nominees”). Although the ratio of that case involved the enforceability of a foreign judgment from Western Australia under RECJA in respect of a dishonoured cheque given to a casino to obtain gambling chips and considerations of public policy against gaming and wagering contracts under s 5(2) of the Civil Law Act (Cap 43, 1994 Rev Ed) and s 3(2)(f) of the RECJA, that judgment needs to be read with some care.

[11] At [13] of the judgment, the Court of Appeal stated that:

A proper reading of the judgment however will show that the Court of Appeal was not ruling, ex cathedra, on a proper construction of s 3(2). The judgment went on to a careful analysis of the approach a Singapore court should take. At the end of the judgment under the heading ‘Conclusion’ the Court of Appeal stated (at [47]):

On the surface, this appears to be the same approach adopted by Khoo J in Perwira Ariffin Bank. In its judgment, the Court of Appeal stated at [39] and [40] that both the New York Convention and the RECJA were enacted with the basic aim of removing pre-existing obstacles to the enforcement of foreign awards or judgments and a narrow reading of the public policy defence in s 3(2)(f) would help further this aim and the considerations of reciprocity enjoin the courts to invoke the public policy defence with caution.

[12] Neither counsel raised Poh Soon Kiat v Desert Palace Inc (trading as Caesars Palace) [2010] 1 SLR 1129 (“Poh Soon Kiat”), a later Singapore Court of Appeal decision which said that Burswood Nominees was unsound because there was no legal basis for reading a higher public policy threshold into s 3(2)(f) and that its decision should be reviewed should the same issue come before the Court of Appeal in the future. The Court of Appeal agreed with Prof Yeo Tiong Min in his article “Statute and Public Policy in Private International Law: Gambling Contracts and Foreign Judgments” (2005) SYBIL 133 that the decision was not defensible in light of the express words in s 3(2)(f) and stated clearly at [114] that the Western Australian judgment in Burswood Nominees could not be registered under s 3(2)(f) on the ground that the judgment was based on a cause of action which could not, by virtue of the public policy encapsulated in s 5(2) of the Civil Law Act (Cap 43, 1999 Rev Ed), be maintained in Singapore. The Court of Appeal said, at [61], that s 3(2)(f) “expressly prohibits the registration of a Commonwealth judgment if it was obtained ‘in respect of a cause of action which for reasons of public policy … could not have been entertained by [a Singapore] court.’” (emphasis in original).

[13] The fourth case cited by Mr Cheng was Westacre Investments Inc v The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) [2009] 2 SLR(R) 166 (“Westacre Investments”). However that case involved considerations of what was “just and convenient” in s 3(1) in enforcing an English judgment that emanated from an arbitration award published in 1994 which was duly registered as a judgment in England in December 1997. An appeal therefrom was dismissed in May 1999 and the House of Lords refused leave to appeal. Registration of the English judgment in Singapore was only sought in July 2004 when it was realised that there may be assets in Singapore. Those issues do not arise here and the only principle that may be of some relevance is that under s 3(1), the court must consider all the circumstances of the case and should permit registration of the Commonwealth judgment only if “it is just and convenient that the judgment should be enforced in Singapore” (see Westacre Investments at [20], [21] and [52]). This included, but was not limited to having regard to the rights of the parties, parties’ conduct, diligence and persistence of the judgment creditor in pursuing its rights, the judgment debtor’s knowledge of the judgment creditor’s intentions vis-á-vis enforcement of the judgment and steps taken by the judgment debtor to obstruct discovery of its assets.

[15] Owens Bank is of interest because it explains the background to the AJA, which is equivalent to our RECJA. It explains that the common law rule of finality of judgments that applies to English judgments and the restrictions placed upon a party’s ability to re-open the litigation, even in the case of fraud, was placed within very restrictive limits, but that the common law declined to give that same finality to foreign judgments preferring to give primacy to the principle that fraud unravels everything (see Owens Bank at 489C–H). In the Judgments Extension Act 1868 (c 54) (UK), the United Kingdom Parliament gave full reciprocal enforceability as between the judgments of the different superior courts within the United Kingdom with no obstacle placed in the way of registration but, by contrast, in enacting the AJA, the judgment creditor seeking registration must first surmount the obstacles which s 9(2) of the AJA (the equivalent of s 3(2) of the RECJA) places in his way and therefore denies finality by the adoption of the common law approach to foreign judgments that are alleged to be obtained by fraud.

[16] As this is a statutory scheme, we should turn to the provisions of the RECJA and O 67 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“ROC”). O 67 envisages two stages. The first stage is an ex parte application by the judgment creditor, supported by an affidavit, for registration of the Commonwealth judgment. The ensuing registration, is straightforward and usually granted, provided the almost, as it were, formal requirements of O 67 r 3 of the ROC are satisfied. The usual order granted must stipulate a period within which an applicant can apply to set aside the registration and, importantly, that execution will not issue until after the expiration of that period (see O 67 r 5(2) of the ROC). This, coupled with the requirement that notice of the registration of the judgment must be served on the judgment debtor with the particulars set out in O 67 r 7(3) of the ROC, gives the judgment debtor notice of the registration of the Commonwealth judgment in Singapore, and the opportunity, if he so wishes, to apply to set aside that registration.

[17] This brings us to the second stage. The applicant, usually the foreign judgment debtor, is given an opportunity to apply to set aside the registration. That application must also be supported by an affidavit setting out the grounds upon which the applicant applies to have the registration set aside (see O 67 r 9(1) of the ROC). If the court hearing the setting aside application is satisfied that the judgment falls within any of the cases where a judgment should not be ordered to be registered under s 3(2), or that it is not just or convenient that the judgment should be enforced or that there is some other sufficient reason for setting aside the registration, it may order the registration of the judgment to be set aside on such terms as it thinks fit (see O 67 r 9(3) of the ROC).

[18] However, the provisions of the RECJA do not make any distinction between the first stage and the second stage. What is the statutory scheme? Section 3(2) sets out specific instances where a Commonwealth judgment will not be registered. It covers instances where it is known from the time of registration at the first stage that an impediment against registration exists as well as those where any impediment can only be known or ascertained at a later stage. Take s 3(2)(e) itself. It may well be that at the first stage, the judgment creditor is unaware that the judgment debtor has filed an appeal and it may equally be the case that after having obtained registration at the first stage, the judgment debtor comes before the Singapore court at the second stage and satisfies the court that he intends to appeal against the foreign judgment. A judgment debtor may file a notice of appeal but yet not proceed with the appeal at any stage. Again, a judgment creditor may not know that the public policy of Singapore will not allow the enforcement of his Commonwealth judgment. Whether the enforcement of a Commonwealth judgment is contrary to the public policy of Singapore may be a contentious issue. In this context it will be noted that the Court of Appeal made observations in December 2009 in Poh Soon Kiat which were contrary to the earlier Court of Appeal decision in Burswood Nominees in October 2004. The same goes for arguments on jurisdiction under s 3(2)(a). It is not always easy to ascertain if s 3(2)(a) is satisfied until it is authoritatively adjudicated by a court of competent jurisdiction. In practice, such grounds are only raised at the second stage when the judgment debtor comes forward to set aside the registration. Section 3(1) gives an overarching discretion. Even if none of the specific instances in s 3(2) apply, a Singapore court may still refuse to enforce an otherwise registrable Commonwealth judgment if, in its view, it was in all the circumstances of the case not just and convenient to do so. This is consistent with the statements cited from previous judgments (see [8] and [10] above).

[19] It is only when we turn to O 67 of the ROC that we find the provision of the two stage process. These are procedural rules. They were made for the orderly, efficient and convenient disposal of legal processes brought before our courts. They can be amended by the Rules Committee and with the approval of the Chief Justice (see s 80(5) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed). Finality to the first stage comes early when the debtor fails to challenge the registration. This usually happens when there is no defence and especially where the defendant is insolvent. There is no need to proceed to the second stage and the registration becomes final.

[20] I therefore cannot accept Mr Fan’s argument that since an appeal was extant at the time SSB applied for registration at the first stage, there was a fatal flaw in the registration granted on 18 February 2011 as that Malaysian judgment was incapable of registration at the first stage. If that is correct then it must follow that a foreign judgment is incapable of registration at the first stage if, unknown to the judgment creditor, the judgment debtor intends to but has not yet appealed. What if the judgment debtor yet later on abandons his appeal before it is heard? In Singapore Civil Procedure 2007 (G P Selvam gen ed) (Sweet & Maxwell Asia, 2007) at para 67/9/1, it is stated, correctly, that although a judgment has been registered, its status is still challengeable and “[t]he party against whom the registered judgment may be enforced is at liberty to apply to have it set aside.”

[21] I should also mention two old cases which support my view of the statutory scheme. Neither counsel brought these cases to my attention.

[22] The first is In The Matter Of Enactment No 10 Of 1922, The Judgments (Reciprocity) Enactment; Ho Hong Bank Ltd v Ho Kai Neo & Anor [1932] MLJ 76 (“Ho Kai Neo”). The plaintiff had applied ex parte for leave to register a Singapore judgment in Johore under the Reciprocal Enforcement of Judgments Enactment (Enactment No 2 of 1922) (FMS) (“the Enactment”). Thorne J, in the court below had refused registration at the ex parte stage because he took the view that default judgments were not registrable under s 3(2)(c) of the Enactment, which is in pari materia to s 3(2)(c) of the RECJA. On appeal, Sproule and Terrell JJ were of the view that the registration should have been allowed as a matter of course and that, in any case, the interpretation of the court below of s 3(2)(c) of the Enactment was wrong. Sproule J’s judgment at pages 76 and 80 are relevant:

[23] In Lam Soon Cannery Co v H W Hooper & Co [1965] MLJ 135 (“Lam Soon Cannery”), one of the arguments raised at the application to set aside (ie, the inter partes stage) was that the original court had acted without jurisdiction. Counsel argued that Sproule J in Ho Kai Neo was wrong. A V Winslow J disagreed, stating at 136-137):

Although Winslow J’s judgment was allowed on appeal (see Lam Soon Cannery Co v Hooper & Co [1965–1967] SLR(R) 149) on other grounds, the above portion of Winslow J’s judgment was not, however, disturbed. In fact, the Court of Appeal supported Winslow J’s reasoning (at [34]–[36]):

Both cases support my views of the statutory scheme and the two stage process laid down in O 67. In so saying, I am not advocating the view that a court can never refuse registration at the first stage. Ordinarily, if the judgment creditor knows that an appeal has been filed, he should not make an application at the first stage. Also there may well be cases where it is so clear that registration will be refused at the first stage. It all depends on the circumstances of each case.

[24] I now turn to another point. O 67 r 3 of the ROC sets out the various requirements of the supporting affidavit. Under r 3(1)(c)(iii) there is a requirement for a statement that to the best of the deponent’s information and belief, the judgment sought to be registered does not fall within any of the categories listed in s 3(2) of the RECJA. There is a rule applicable to all ex parte applications, and O 67 r 3 is no exception, that the applicant has a duty to make full and frank disclosure (see The “Vasiliy Golovnin” [2008] 4 SLR(R) 994 (“Vasiliy Golovnin”) at [83]–[93] (in the context of an application for a warrant of arrest in admiralty proceedings) and Bahtera Offshore (M) Sdn Bhd v Sim Kok Beng and another [2009] 4 SLR(R) 365 at [18]–[33] (in the context of a Mareva injunction)).

[25] I note that one Andrew John Newton Lee (“Mr Andrew Lee”) had affirmed an affidavit on behalf of SSB on 17 February 2010 where he had deposed, at [14], that the Malaysian judgment, if registered in the High Court of Singapore, will not be liable to be set aside with respect to the said registration under s 3(2) of the RECJA as the same does not fall within any of the cases mentioned in s 3(2) of the RECJA when in fact, about 5 months earlier, MDS and RT had filed their appeals against the Malaysia judgment.

[26] However, I am satisfied that on balance, this was not a deliberate statement made to mislead the court; it was probably due to some miscommunication. The fact that the appeals had been filed was not something that was or could be hidden. No one raised this allegation below. RT has not suffered any prejudice. Furthermore, the first objections raised by RT in his affidavit sworn on 7 April 2010 was that (i) he was not duly served with the process of the original court, (ii) there was no such action as described by SSB, viz, Civil Suit No. D7 (D9)(d1)-22-888-2200 in the High Court of Malaya at Kuala Lumpur and (iii) the foreign judgment does not exist. What had happened was a typographical error: the last four digits of the Malaysian judgment should have read “2000” and not “2200”. It was only in his 27 April 2010 affidavit that RT deposed that he had filed an appeal on 15 September 2009. By this time RT had been made a bankrupt in Malaysia. SSB also applied and was granted an order to correct the reference to the Malaysian suit to read as “Civil Suit No. D7 (D9)(d1)-22-888-2000”. There were then long delays to the continued hearing of these proceedings whilst RT obtained sanction of the Official Assignee of Malaysia to continue with this application. The matter was only heard below on the merits on 17 June 2011. RT does not appear to have raised any arguments based on authorities such as Vasiliy Golovin below (see written submissions dated 30 March 2011 and the learned AR’s Notes of Evidence). It was only in RT’s written submissions filed on 14 July 2011 for this appeal that RT alleged SSB “misled” the court by Mr Andrew Lee’s affidavit but this point was not pursued before me.

[27] RT’s last avenue for an appeal, an application for leave to appeal to the Malaysian Federal Court, was dismissed on 14 June 2011. By 17 June 2011, the date when the learned AR dismissed RT’s application, all avenues of appeal had been exhausted by RT. SSB’s claim against RT is on his guarantee against default and non-payment of facilities granted by SSB (UMF) to MDS. The vast majority of such claims are straightforward and given on a summary basis, as was this judgment. It is unsurprising that the learned AR below dismissed RT’s application to set aside the registration of the Malaysian judgment.

[28] Even if Mr Fan’s contention is correct, and I do not, with respect, believe it is, there is no utility or practical consideration that requires the setting aside of the registration just for SSB to apply once more to register the Malaysian judgment. Such over emphasis on technicalities no longer has any place in modern civil procedure. Khoo J’s approach in Perwira Ariffin Bank, in which he stayed the setting aside proceedings pending the outcome of an appeal, has everything to recommend it.