Manharlal Trikamdas Mody and another v Sumikin Bussan International (HK) Limited

1. George Wei JC:

2. Introduction

3. [1]

   [1] The first plaintiff (“P1”) is the husband of the second plaintiff (“P2”). Both P1 and P2 (hereinafter referred to collectively as “the Plaintiffs”) were adjudged bankrupt in Singapore on 4 February 2005. The Plaintiffs are permanent residents of Singapore although it is undisputed that they are also Indian nationals. The defendant (“the Defendant”) is a company incorporated under the laws of the Hong Kong Special Administrative Region (“the HKSAR”). It is undisputed that the Defendant does not have any presence in Singapore at all.

4. [2]

   [2] The Defendant, being a judgment creditor of P1, commenced execution proceedings against a property located in Mumbai, India (“the Mumbai property”) about ten years ago. In Originating Summons No 601 of 2013 (“OS 601/2013”), the Plaintiffs are seeking to restrain the Defendant from continuing with the legal proceedings in India against the Plaintiffs and the Official Assignee (“the OA”). Leave to serve out of jurisdiction was also sought by the Plaintiffs in order for OS 601/2013 to be served on the Defendant in the HKSAR. The application before me today is Summons No 5391 of 2013 (“SUM 5391/2013”), which is taken out by the Defendant. In this application, the Defendant seeks to set aside OS 601/2013 and the order granting leave to serve out of jurisdiction (“the service order”), as well as the actual service on the Defendant in the HKSAR. After considering the evidence and the arguments made by all parties, I am allowing the Defendant’s application in SUM 5391/2013. I now give the reasons for my decision.

5. The facts

6. [3]

   [3] The background facts to this longstanding dispute between the Plaintiffs and the Defendant are complex, involving litigation in the HKSAR, India, and now, Singapore. Therefore, there is a need to first set out a brief summary of the main events leading up to the present application (viz, SUM 5391/2013) to set aside OS 601/2013, the service order and the actual service on the Defendant in the HKSAR. Given the multiplicity of proceedings across different jurisdictions, I will consider the legal proceedings in the HKSAR, India and Singapore separately for ease of reference.

7. Legal proceedings in the HKSAR

8. [4]

   [4] Legal proceedings were first commenced in the HKSAR back in 2001 by the Defendant against P1. The Defendant succeeded in obtaining a judgment (“the HKSAR judgment”) against P1 on 31 May 2002 for the sum of US$618,331.26. The application for leave to appeal by P1 was dismissed.

9. [5]

   [5] In October 2002, the Defendant commenced proceedings to enforce the judgment debt and subsequently obtained a charge over a property in the HKSAR (“the HKSAR property”) belonging to P1. On 14 January 2005, the HKSAR property was sold and the sum of HK$215,528 was paid to the Defendant in partial satisfaction of the judgment debt. It is undisputed that the outstanding judgment debt remains unsatisfied till date.

10. [6]

    [6] At this juncture, it also bears noting that P2 was not involved in the HKSAR proceedings. Thus, P2 was never a judgment debtor of the Defendant.

11. Legal proceedings in India

12. [7]

    [7] On 26 June 2003, the Defendant commenced execution proceedings (“the execution proceedings”) in the High Court of Bombay against the Mumbai property belonging to P1 (of which P2 also claims an interest in). The execution proceedings were by way of a claim to enforce the HKSAR judgment against P1 in India.

13. [8]

    [8] Between June 2003 and early 2005, numerous applications and hearings involving the Defendant and the Sheriff of Mumbai (“the Sheriff”) took place before the High Court of Bombay. These resulted in, amongst others, the issuance of a warrant of attachment, a certificate of attachment (returned by the Sheriff) and a warrant of sale in the first half of 2004.

14. [9]

    [9] While the execution proceedings were ongoing in India, the Plaintiffs were adjudged bankrupt in Singapore on 4 February 2005. At this juncture, I note from across the different documents that have been placed before me that there is a slight discrepancy as to the precise date on which the Plaintiffs were adjudged bankrupt. That date is stated as 9 February 2005 in the Plaintiffs’ written submissions whereas it is stated as 15 February 2005 in the Defendant’s written submissions. In both P1 and P2’s affidavits, 4 February 2005 is referred to as the correct date. After perusing the affidavits and the exhibits attached therein, including the letters that were sent by the OA, I am of the view that the relevant date should be 4 February 2005. In any event, nothing turns on this slight discrepancy as it is undisputed that the bankruptcy orders were granted in February 2005. Further details of the bankruptcy proceedings in Singapore will be provided later in this judgment (see [21]–[22] below).

15. [10]

    [10] On 14 April 2005, P1 applied to the High Court of Bombay for a stay of the execution proceedings (“the bankruptcy stay action”) that were ongoing in India on the basis that P1 had been adjudged bankrupt in Singapore. The bankruptcy stay action was commenced with the written consent of the OA by way of a letter dated 13 April 2005. Subsequently, P2 applied to intervene in the bankruptcy stay action and to be joined as an interested party on the basis that she was a co-owner of the Mumbai property. P2’s application, however, was eventually dismissed in August 2005 for want of prosecution.

16. [11]

    [11] With regard to the bankruptcy stay action, a single judge of the High Court of Bombay granted, at first instance, an ad-interim stay of the sale of the Mumbai property on the basis of P1’s bankruptcy in Singapore. The Defendant appealed against that decision. The Division Bench of the High Court of Bombay (“the Division Bench”) allowed the appeal and discharged the ad-interim stay of the sale of the Mumbai property. It was held that the attachment was levied on the Mumbai property prior to the grant of the bankruptcy order in Singapore. On that basis, the bankruptcy order could not “affect the right of the attaching creditor of the insolvent”. The Plaintiffs, however, complain that this ruling was obtained by the Defendant’s failure to disclose to the Division Bench that it had filed a proof of debt in the ongoing bankruptcy proceedings in Singapore. In any event, P1 lodged an appeal against the decision of the Division Bench on 29 November 2005 and that appeal was pending before the Supreme Court of India (“the Indian Supreme Court”) as at the date of the hearing before me.

17. [12]

    [12] It appears that, at about this time in around September 2005, the terms of the sale of the Mumbai property were amended to recognise the rights of ING Bank, the then lessee of the Mumbai property. At first instance, a single judge of the High Court of Bombay permitted the amendment in order to allow ING Bank to remain in possession until it was repaid the rental security deposit. The Defendant appealed against this decision but the appeal was dismissed by the Division Bench on 2 May 2006. The Division Bench held that although ING Bank did not have a lien or a mortgage over the Mumbai property, it had an irrevocable licence to remain in possession until the rental security deposit was returned. P1 subsequently filed an appeal to the Indian Supreme Court on 23 January 2007.

18. [13]

    [13] Meanwhile, on 14 October 2006, P1 commenced a fresh action (“the reciprocating territory action”) to set aside the execution proceedings on the basis that the HKSAR was not a reciprocating territory as declared by the Indian government. Although a government notification issued in 1968 included Hong Kong as a reciprocating territory, P1 argued that the notification did not, in any event, cover the HKSAR. P1 also objected on the basis that the HKSAR High Court was not a superior court of record. It bears noting that these objections were being raised for the first time. It is further noted that the ground of attack in the reciprocating territory action is quite separate and distinct from that in the bankruptcy stay action, which was based on the bankruptcy order against P1 in Singapore.

19. [14]

    [14] On 17 February 2009, the Sheriff held an auction of the Mumbai property. This was followed by the Sheriff’s application to the High Court of Bombay in June 2009 for confirmation of the sale. It was at this stage when P2 filed an application to protect her interest in the Mumbai property. P2’s claim appears to be based on the assertion that the Mumbai property was purchased with investment earnings that had been deposited into the Plaintiffs’ joint bank accounts. Further details of P2’s application were not led in the evidence before me. It is noted that the Defendant’s position is that P2 does not have any interest in the Mumbai property.

20. [15]

    [15] With regard to the reciprocating territory action, P1’s application was dismissed at first instance by a single judge of the High Court of Bombay on 13 February 2008. P1 appealed and the Division Bench allowed the appeal, holding that the HKSAR judgment was not enforceable in India. As a result, the execution proceedings were discharged by the Division Bench. The Defendant has since lodged an appeal against the decision of the Division Bench and the appeal was pending before the Indian Supreme Court as at the date of the hearing before me.

21. [16]

    [16] As a result of the Division Bench’s decision to discharge the execution proceedings, the High Court of Bombay, on 12 July 2010, declined to confirm the sale and instead ordered the sale monies to be returned to the buyer.

22. [17]

    [17] On 4 October 2010, the Indian Supreme Court ordered all parties to maintain the status quo with respect to the Mumbai property pending the hearing of the appeal in relation to the reciprocating territory action. In summary, there are now (as at the date of the hearing before me) three appeals scheduled to be heard jointly by the Indian Supreme Court:

23. (a) P1’s appeal with respect to the bankruptcy stay action;

24. (b) P1’s appeal with respect to ING Bank’s application to protect its interest in the rental security deposit; and

25. (c) the Defendant’s appeal with respect to the reciprocating territory action.

26. [18]

    [18] Apart from that, it is noted that a gazette notification was issued by the Indian government on 14 July 2012 (“the 2012 Gazette Notification”), retrospectively providing that the HKSAR was a reciprocating territory under the Indian Civil Procedure Code with effect from 1 July 1997. The 2012 Gazette Notification also provides that the HKSAR High Court is a superior court of record. It appears that the validity of the 2012 Gazette Notification and its retrospective operation will be a key issue in the Defendant’s appeal to the Indian Supreme Court with regard to the reciprocating territory action. In fact, it bears noting that the Defendant has since highlighted the 2012 Gazette Notification to the Indian courts by way of a summons for directions on 12 March 2013. To this end, the Plaintiffs appear to take the view that the 2012 Gazette Notification is invalid in so far as it purports to have retrospective effect.

27. [19]

    [19] Notwithstanding the pending appeals before the Indian Supreme Court, the Plaintiffs commenced a fresh action in India on 22 October 2013 against the Indian government (“the gazette notification action”), seeking to set aside the 2012 Gazette Notification. The Plaintiffs assert that the gazette notification action was commenced in response to the Defendant’s position in relation to the 2012 Gazette Notification.

28. [20]

    [20] Before turning to consider the legal proceedings in Singapore, it is emphasised that the question as to whether there was a valid execution or enforcement treaty covering the HKSAR at the material time is a matter for the Indian courts to determine. While the Singapore courts can take cognisance of the appeals pending before the Indian Supreme Court and the arguments raised therein, I make no comment on the substantive merits of the appeals before the Indian Supreme Court. In this respect, it is further noted that the parties also agreed during the hearing before me to have the present application decided on the facts as they stood as at the date of this hearing.

29. Legal proceedings in Singapore

30. The bankruptcy proceedings

31. [21]

    [21] The legal proceedings in Singapore date back to 4 February 2005 when the Plaintiffs were adjudged bankrupt (see [9] above). It will be recalled that as at that date, the Defendant had already commenced the execution proceedings in India against the Mumbai property.

32. [22]

    [22] The bankruptcy proceedings were not brought by the Defendant. To this end, the Defendant asserts that it was only informed of the Plaintiffs’ bankruptcy on 14 April 2005. This was when P1 commenced the bankruptcy stay action before the High Court of Bombay. Subsequently, the Defendant filed a proof of debt with the OA on 10 June 2005 for the full judgment debt of US$618,331.26. In this respect, the Plaintiffs assert that the Defendant, in filing the proof of debt, failed to disclose the part payment it had received from the sale of the HKSAR property (see [5] above). The Plaintiffs further state that the Defendant also failed to disclose the fact that it had commenced the execution proceedings against the Mumbai property in India. The Defendant denies these assertions and states that, in any event, the proof of debt was subsequently amended in January 2008 to reflect the partial satisfaction of the judgment debt from the sale of the HKSAR property.

33. OS 601/2013

34. [23]

    [23] On 23 March 2013, the Plaintiffs entered into a Deed of Assignment with the OA in respect of a right to claim against the Defendant. On 5 July 2013, about ten years after the Defendant first commenced the execution proceedings in India, OS 601/2013 was commenced by the Plaintiffs in Singapore. The application was supported by an affidavit affirmed by P1 on 4 July 2013 (“the substantive affidavit”). As mentioned above at [2], in OS 601/2013, the Plaintiffs seek an order to, inter alia, stay all proceedings in India, including the execution proceedings against the Mumbai property.

35. [24]

    [24] As the Defendant did not have any presence in Singapore, the Plaintiffs made an ex parte application on 22 July 2013 for leave to serve OS 601/2013 out of jurisdiction. A supporting affidavit affirmed by P1 on 22 July 2013 (“the service affidavit”) was filed, stating that the application was made pursuant to O 11 r 1(p), r 1(r) and/or r 1(s) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“RC”). The order was granted the very next day on 23 July 2013. It is undisputed that the Defendant was not informed of the Plaintiffs’ application and that it was not invited to attend the hearing.

36. [25]

    [25] After the service order was granted, OS 601/2013 was served on the Defendant in the HKSAR on 22 August 2013. The Defendant entered an appearance on 12 September 2013 and, on 23 September 2013, the Defendant obtained an extension of time for the purposes of disputing the jurisdiction of the Singapore courts.

37. SUM 5391/2013

38. [26]

    [26] On 14 October 2013, the Defendant proceeded to file SUM 5391/2013. In this application, the Defendant seeks to set aside OS 601/2013, the service order, as well as the actual service on the Defendant in the HKSAR. For the avoidance of doubt, the application before me is SUM 5391/2013, and not OS 601/2013.

39. The issues

40. [27]

    [27] In SUM 5391/2013, the Defendant relies on six broad grounds to support its application to set aside OS 601/2013, the service order, as well as the actual service on the Defendant in the HKSAR. These grounds are set out below in the same sequence as they appear in the Defendant’s submissions:

41. (a) First, the Defendant submits that the Plaintiffs do not have locus standi to sue in their own names without joining the OA (“the locus standi objection”).

42. (b) Second, the Defendant highlights that OS 601/2013 was commenced pursuant to the Bankruptcy Act (Cap 20, 2009 Rev Ed) (“BA”), thus the provisions in the RC are inapplicable. Accordingly, the service order (as well as the actual service in the HKSAR) should be set aside as being wrongly obtained, given that the Plaintiffs have relied on O 11 of the RC (“the procedural objection”).

43. (c) Third, the Defendant asserts that the service order (as well as the actual service in the HKSAR) should be set aside as the Plaintiffs failed to make full and frank disclosure of all material facts when applying ex parte for leave to serve out of jurisdiction (“the disclosure objection”).

44. (d) Fourth, the Defendant asserts that the service order (as well as the actual service in the HKSAR) should be set aside as the Plaintiffs did not establish a good arguable case on the merits of the application (“the merits objection”).

45. (e) Fifth, the Defendant argues that Singapore is not, in any event, the proper forum “for the hearing of the OS and the reliefs and remedies sought” (“the conflicts objection”). In this regard, the Defendant submits that the Singapore courts should decline jurisdiction on the basis of forum non conveniens.

46. (f) Sixth, the Defendant relies on res judicata to set aside OS 601/2013 and the service order (“the res judicata objection”). This includes cause of action estoppel, issue estoppel and the extended doctrine of res judicata.

47. [28]

    [28] These six objections will be covered in turn. However, it is preliminarily observed that these six objections fall into two broad categories. First, there are the objections which relate directly to the issue of whether OS 601/2013 is maintainable at all. This concerns the prayer to set OS 601/2013 aside based on a lack of locus standi to bring the proceedings and res judicata. Following the sequence adopted above, however, the res judicata objection will be discussed towards the end of this judgment. Second, there are the objections which relate to the grant of leave to serve OS 601/2013 out of jurisdiction. A broad range of grounds were relied upon in this category, including the non-disclosure of material facts, the absence of a good arguable case and forum non conveniens. To be clear, in the event that OS 601/2013 is set aside on the grounds set out in the first category, there will strictly be no need to consider the issues arising from the second category. Nevertheless, for the sake of completeness, I will still proceed to address the issues regarding the grounds within the second category even if the Defendant succeeds on the grounds within the first category.

48. The locus standi objection

49. [29]

    [29] The locus standi objection is an attack on the Plaintiffs’ right to commence the proceedings in OS 601/2013 against the Defendant. The fundamental basis of this objection is s 76(1)(a) of the BA, which provides that on the making of the bankruptcy order, the property of the bankrupt shall “vest in the OA without any further conveyance, assignment or transfer”. In this respect, “property” is defined in s 2(1) of the BA as including:

50. When read together, the foregoing provisions yield the understanding that the vesting principle in s 76(1)(a) of the BA applies to all property wherever situated. This will include real property situated outside of Singapore, such as in India. Section 76(1)(c) of the BA goes on to provide that on the making of a bankruptcy order:

51. [30]

    [30] Under s 105(1) of the BA, a creditor shall not be “entitled to retain the benefit of the execution or attachment against the OA unless he has completed the execution or attachment before the date of the bankruptcy order”. In this regard, it is notable that these statutory provisions only apply to the affairs of a bankrupt’s estate subsequent to the adjudication of his bankruptcy.

52. [31]

    [31] Section 111 of the BA sets out the powers granted to the OA in respect of the property comprised in the bankrupt’s estate. It provides, inter alia, that the OA may sell the property. Section 112 goes on to state that the OA’s powers include the right to bring, institute or defend any action or legal proceedings relating to the property of the bankrupt. These are powers conferred on the OA. It follows that the OA could have decided in the present case to bring proceedings in its name against the Defendant for an order under ss 76(1)(c) and 105 of the BA to restrain the execution proceedings in India. For reasons better known to the OA and the relevant parties, this did not happen. Instead, the Plaintiffs have commenced OS 601/2013 in their own names on the basis that an assignment had been obtained from the OA (see [23] above).

53. Whether the rights under ss 76 and 105 of the BA are assignable

54. [32]

    [32] In essence, the Defendant asserts that the statutory rights embodied in both ss 76(1)(c) and 105 of the BA are personal to the OA. To this extent, they are non-assignable at law and the Plaintiffs do not have the requisite locus standi to commence OS 601/2013 against the Defendant. The crucial question, therefore, is whether the rights conferred by ss 76(1)(c) and 105 in the BA can be assigned to the Plaintiffs by the OA such that the Plaintiffs are able to bring the action in their own names. In determining this issue, there is also a need to consider the extent and circumstances under which an assignment of those rights can be executed.

55. [33]

    [33] In support of their proposition, the Defendant relies on an English commentary and a number of English decisions under the Insolvency Act 1986 (c 45) (UK) (“UK Insolvency Act 1986”) to draw a distinction between property (including choses in action) which belonged to the bankrupt prior to the making of the bankruptcy order and those which only arose after bankruptcy pursuant to the statutory provisions in the BA. It is the Defendant’s position that while the OA can assign choses in action which belonged to the bankrupt prior to bankruptcy, there is no power to assign rights which arise after bankruptcy pursuant to the statutory powers under the BA.

56. [34]

    [34] To this end, the Defendant refers to Anthony Guest, Guest on the Law of Assignment (Sweet & Maxwell, 1st Ed, 2012) (“Guest on the Law of Assignment”) at para 4–30, where the learned author begins by explaining that under the UK Insolvency Act 1986, a right of action which has become vested in the trustee as part of the bankrupt’s estate can be assigned and sold by the trustee for the benefit of the creditors of the bankrupt. That said, the learned author goes on to assert at para 4–31 that this exemption from the law on maintenance and champerty does not extend to cover the assignment of a right of action conferred exclusively on the liquidator. Therefore, it was said that the assigned right must be one which had arisen and which could have been pursued by the company at the time of the liquidation. A distinction must, accordingly, be drawn between the property of the company and the statutory powers conferred on the liquidator. English decisions cited in support of this proposition include In re Oasis Merchandising Services Ltd [1998] Ch 170 (“Re Oasis”) and Re Ayala Holdings Ltd (No. 2) [1996] 1 BCLC 467 (“Re Ayala Holdings”).

57. [35]

    [35] In particular, the principles in Re Oasis have been applied locally by the Court of Appeal in Neo Corp Pte Ltd (in liquidation) v Neocorp Innovations Pte Ltd [2006] 2 SLR(R) 717 (“Neo Corp”). In Neo Corp, the company in question was placed under judicial management. The judicial managers applied under s 227T of the Companies Act (Cap 50, 2006 Rev Ed) (“CA”) to have a floating charge created by the company in favour of the defendant creditor set aside as an unfair preference. Subsequently, a winding up order was granted which, inter alia, authorised the liquidators to continue with any legal action commenced by the judicial managers. Thereafter, the defendant applied to set aside the order authorising the liquidators to continue the action on the basis that the company was no longer under judicial management.

58. [36]

    [36] At first instance, the High Court held that s 227T of the CA did not, as a matter of construction, allow anyone other than the judicial managers to invoke the powers under that provision (see Neo Corp Pte Ltd (under judicial management) v Neocorp Innovations Pte Ltd and another application [2005] 4 SLR(R) 681). On this basis, the order authorising the liquidators to continue with the action commenced by the judicial managers was set aside. Before the Court of Appeal, Chao Hick Tin JA framed the legal issue as whether “an action instituted by the judicial managers of a company to challenge a transaction entered into by the company with a third party on the ground of unfair preference ... may be continued by the liquidators when judicial management of the company is followed by a winding up order before the action is adjudicated upon” (at [1]).

59. [37]

    [37] In upholding the decision of the High Court, the Court of Appeal essentially undertook an exercise of statutory interpretation in the light of the reasoning adopted in Re Oasis. In particular, the Court of Appeal emphasised that the words “be void as against the judicial manager” in s 227T of the CA indicates that the statutory right is personal to the judicial managers. To that end, the Court of Appeal referred to Re Oasis and made the following observations at [24]:

60. [38]

    [38] Apart from Neo Corp, the Defendant also referred to the later Court of Appeal decision of Standard Chartered Bank v Loh Chong Yong Thomas [2010] 2 SLR 569 (“Standard Chartered”) which involved personal bankruptcy. In that case, the respondent lawyer had been made bankrupt by a creditor of his law firm. Subsequently, the respondent commenced an action in the District Court in contract and tort against the appellant bank for breach of duty in respect of two personal bank accounts maintained by the respondent. The action was brought in the respondent’s own name. The OA’s sanction was not obtained prior to the commencement of the action but only some six months after the writ of summons was first filed. At no time did the respondent seek or obtain an assignment of the choses in action from the OA.

61. [39]

    [39] The District Court and the High Court (on appeal) held that the respondent had locus standi to maintain the suit under s 131(1)(a) of the BA on the basis that the respondent would be competent to sue in his own name upon obtaining the sanction of the OA (see Loh Chong Yong Thomas v Standard Chartered Bank [2007] SGDC 82). In other words, there was no need for a further assignment of the specific choses in action once sanction of the OA had been obtained.

62. [40]

    [40] Four issues were raised before the Court of Appeal, three of which are relevant to the present case. The first was whether the choses in action were properly to be regarded as property that vested in the OA upon the respondent’s bankruptcy. If the answer was yes, the second issue was whether an assignment of the choses in action was necessary before the respondent could commence the action. The third issue was whether the sanction of the OA was, in any event, necessary before any suit was commenced.

63. [41]

    [41] On the first issue, it has been noted above that s 2(1) of the BA defines “property” as including “all things in action … whether present or future or vested or contingent, arising out of or incidental to … property”. In this regard, V K Rajah JA, in delivering the judgment of the court, held at [12] that the definition was broad enough to include all choses of action in relation to property. Choses in action which did not arise out of or which were not incidental to property, such as a claim for injury to reputation in a defamation suit did not, however, fall within the scope of the definition of property in s 2(1).

64. [42]

    [42] Given that s 76(1)(a) provides that the property of the bankrupt vests in the OA automatically on bankruptcy without the need for any further conveyance, assignment or transfer, the second issue was whether, given that the property had vested in the OA, it was necessary for the OA to assign the property back to the bankrupt before the bankrupt could sue on that property in his own name. It will be recalled that in Standard Chartered, no assignment of the specific choses in action had been obtained. Instead, the bankrupt had relied on the subsequent sanction of the OA as the basis of his right to sue in his own name. For this reason, Rajah JA commented at [16] that the issue was hypothetical and further noted that in any event, it was not the practice of the OA to assign property back to the bankrupt such that the bankrupt could pursue a claim in respect of that property. It was observed that an assignment of the property back to the bankrupt would necessarily require considerable administrative oversight by the OA and be subject to conditions to safeguard the interests of creditors. Therefore, in most cases, it would likely be far simpler and more convenient for the OA to sue on the property.

65. [43]

    [43] That said, Rajah JA explained at [15] that:

66. [44]

    [44] This guiding principle laid down by Rajah JA lies at the heart of the Defendant’s attack on the Plaintiffs’ standing to bring OS 601/2013 in their own names. Indeed, the importance of this guiding principle is further underscored by the holding in Standard Chartered that it remains applicable even where the special provisions relating to the sanction of the OA were applicable. While the provisions set out in s 131(1)(a) of the BA are not directly relevant to the present case, a brief summary will be helpful in appreciating the importance of the guiding principle.

67. [45]

    [45] Section 131(1)(a) of the BA states that an undischarged bankrupt is “incompetent to maintain any action, other than an action for damages in respect of an injury to his person, without the previous sanction of the OA”. The consequences of a breach of s 131(1)(a) are serious – not only is the bankrupt incompetent to maintain the proceedings, he also commits a criminal offence under s 131(2), punishable by a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years or to both.

68. [46]

    [46] The origin and history behind s 131(1)(a) of BA is set out in detail in Standard Chartered at [19]–[27] and will not be traversed again in this judgment. What is important is the holding of the Court of Appeal at [28] that s 131(1)(a) was introduced to “give the OA full control of the administration of a bankrupt’s estate for the benefit of creditors”. That being so, the Court of Appeal stated that the intention of the legislature must have been to exclude the retrospective operation of any sanction obtained by the bankrupt. What was required, and had to be strictly adhered to, was the requirement that sanction be obtained prior to the commencement of any action.

69. [47]

    [47] What is even more significant, however, is the holding of the Court of Appeal on the relationship between s 131(1)(a) of the BA and the guiding principle referred to earlier. The question posed in Standard Chartered was whether an assignment was still required where the sanction of the OA had been obtained prior to commencement of proceedings. Rajah JA at [30] held that s 131(1)(a) implied that it is only in cases where the bankrupt would be competent to maintain an action despite the bankruptcy that he required the prior sanction of the OA. To put the matter the other way round, the effect of s 131(1)(a) was to restrict the competence of a bankrupt to maintain any action (other than an action for damages in respect of injury to his person).

70. [48]

    [48] The actions which the bankrupt retained competency over were described at [30] of Standard Chartered as actions which “will not, for practical reasons, be actions relating to property which vests in the OA upon bankruptcy”. In other words, they were actions relating to property which did not vest in the OA upon bankruptcy. In such cases, while the action remained vested in the bankrupt, the bankrupt was disabled from commencing the action (ie, lack of competence) without the prior sanction of the OA pursuant to s 131(1)(a) of the BA. This result was said to be consistent with the object of the legislation which was to, inter alia, disable some of a bankrupt’s civil rights and ensure that the OA has conduct and oversight of the bankrupt’s property and affairs.

71. [49]

    [49] The Court of Appeal then turned to address the question of whether an assignment of the property back to the bankrupt was still necessary where the sanction of the OA had been obtained. A number of Malaysian decisions were cited, including Goh Eng Hwa v M/S Laksamana Realty Sdn Bhd [2004] 3 MLJ 97 (“Goh Eng Hwa”), which stands for the proposition that where sanction from the OA had been obtained, a further assignment of the property would not be required. While the Court of Appeal in Standard Chartered agreed with the conclusion arrived at in Goh Eng Hwa, the reasoning adopted was quite different. In this regard, the Malaysian Court of Appeal in Goh Eng Hwa took the view that the assignment was simply not necessary where prior sanction had been obtained. The Singapore Court of Appeal, however, held that the reason was because s 131(1)(a) is necessarily concerned with actions in respect of property that did not vest in the OA upon bankruptcy. In such cases, no assignment is necessary because the property remains vested in the bankrupt person. Indeed, with respect, I would add that in such a case, an assignment of the property to the bankrupt by the OA is not even possible ­-­ the OA has nothing to assign back in respect of the chose in action.

72. [50]

    [50] For completeness, it is noted that the Court of Appeal in Standard Chartered went on to hold that an action in defamation was not an action for damages in respect of an injury to his person. On this basis, s 131(1)(a) applied such that it was still necessary for the bankrupt to obtain the prior sanction of the OA.

73. [51]

    [51] Apart from the arguments explored above, the Defendant also highlighted that the Report of the Insolvency Law Review Committee (2013) (“the ILRC Report 2013”) at p 73 agreed that actions created under the corporate insolvency legislation and statutorily vested in the office of the liquidator should not be assigned but should remain vested in the liquidator. While the report was commissioned by the Ministry of Law and is of some persuasive value, the views of the committee are not binding on the courts. Following the approach taken in Neo Corp which applied Re Oasis, the key question is whether, on a proper construction of ss 76(1)(c) and 105 of the BA, the rights of the OA are personal and thus incapable of assignment at law.

74. [52]

    [52] In support of the proposition that the rights are personal to the OA, the Defendant also refers to s 112 of the BA, which as set out above at [31], states that the OA’s powers include the right to bring, institute or defend any action or legal proceedings relating to the property of the bankrupt. These are powers which have been expressly conferred on the OA by way of statute. The substantive grounds of the application for a stay would thus be found in ss 76(1)(c) and 105 of the BA.

75. [53]

    [53] Nevertheless, there is nothing in the wording of ss 76(1)(c), 105 and 112 of the BA which directly suggests that the power to bring proceedings for a stay are intended to be assignable. Indeed, while the Indian enforcement proceedings (for which a stay is now sought) were begun before the bankruptcy of the Plaintiffs, the substantive provisions under which the right to seek a stay is said to flow were only applicable after the order for bankruptcy was made.

76. [54]

    [54] After due consideration of the law in this area, I am of the view that the statutory rights under ss 76(1)(c) and 105 of the BA are indeed personal to the OA and are thus not capable of assignment at law. Notwithstanding that the analysis in Re Oasis as applied in Neo Corp was made in the context of corporate insolvency, in my judgment, the reasoning adopted there applies with equal force in cases of personal bankruptcy. In fact, the wording in s 227T of the CA makes specific references to the statutory provisions in the BA:

77. [55]

    [55] Further, it is noted that there are a few provisions in the BA which expressly state that the application is to be made by the OA, eg, s 98(1) for undervalue transactions, s 99(1) for unfair preferences and s 103(2) for extortionate credit transactions. In my judgment, little turns on the difference in wording between an application which is “to be made by the OA” and an action or outcome which is “void as against the OA”. On the basis of the reasoning in Neo Corp and Re Oasis, I am of the view that the rights arising out of ss 76 and 105 of the BA are personal to the OA and are thus not capable of assignment at law.

78. [56]

    [56] For the reasons above, even if there had been an assignment from the OA to the Plaintiffs of the right to sue under ss 76(1)(c) and 105 of the BA, that assignment is ineffective and has no legal effect. It follows that OS 601/2013 is set aside as the Plaintiffs do not have the requisite locus standi to commence the action. I note that the Defendant has also raised a couple of other issues in relation to the locus standi objection and the terms of the assignment. Given the finding that the rights under ss 76(1)(c) and 105 of the BA are not, in any event, capable of assignment at law, in the light of the absence of full arguments by both parties, I will only make a couple of passing observations on the other issues raised by the Defendant.

79. Whether there was a valid assignment

80. [57]

    [57] In the present case, the Defendant also complains that the Plaintiffs were not forthcoming in disclosing the Deed of Assignment that gave them the right to commence OS 601/2013. On 30 September 2013, the OA confirmed with the Plaintiffs’ law firm that a Deed of Assignment dated 21 March 2013 had been entered into. In that letter, the Deed of Assignment was said to have “assigned the action concerning the property to your clients [ie, the Plaintiffs]”. It appears that a heavily redacted version of the Deed of Assignment was sent to the Defendant on 7 October 2013. Subsequently, in P1’s affidavit dated 15 November 2013, a slightly less heavily redacted version of the Deed of Assignment was attached as an exhibit.

81. [58]

    [58] According to the Defendant, a complete unredacted copy of the Deed of Assignment was only made available to the Defendant when the OA stepped in and disclosed the entire document. Quite apart from the Defendant’s arguments on the Deed of Assignment and the question of locus standi, as will be seen below, the Plaintiffs’ reluctance to disclose the unredacted Deed of Assignment, especially in relation to the ex parte application for leave to serve out of jurisdiction, is in any case a relevant factor in determining whether the service order should be set aside.

82. [59]

    [59] Clause 1.1 of the Deed of Assignment defined the assigned property as follows:

83. The assignor was identified as the OA while the assignees were named as the Plaintiffs. The Defendant referred to in the Deed of Assignment is the Defendant named in OS 601/2013.

84. [60]

    [60] This is followed by cl 2 of the Deed of Assignment, which states that:

85. [61]

    [61] Leaving aside the Defendant’s complaint regarding the redaction of the Deed of Assignment, the Defendant also raised the objection that the Deed of Assignment did not assign the property back to the Plaintiffs. Instead, what was assigned to the Plaintiffs were the OA’s rights, title and interest at law or in equity to claim against the Defendant in respect of such property as may be comprised in the estates in bankruptcy of the Plaintiffs.

86. [62]

    [62] At this juncture, it bears noting that the Deed of Assignment does not, given the definition of “assigned property”, purport to assign any of the tangible property, including the Mumbai Property, back to the Plaintiffs. All that was assigned pursuant to the Deed of Assignment was the right of the OA to take action in respect of that property. The limitation of the assignment in this manner is understandable. If the OA’s intention was to re-vest such property in the Plaintiffs, clear and detailed terms, conditions and safeguards would have been necessary to protect the interests of the creditors in general.

87. [63]

    [63] In this respect, the Defendant argues that the assignment is invalid in so far as it only purports to assign the right to claim in respect of the property, and not the property itself. The Defendant further asserts that the right to a remedy by which that chose in action can be enforced cannot be sold or assigned separately from the right to which it relates. In support of this proposition, the Defendant cites the English decision of In Re GP Aviation Group International Ltd (in liquidation) [2014] 1 WLR 166 (“Re GP”).

88. [64]

    [64] In Re GP, the revenue authority had raised discovery assessments against the company for corporation tax alleged to have arisen as a result of the sale of the company’s assets. At the request of the former directors of the company, the liquidator caused the company to serve a notice of appeal against the discovery assessments. The liquidator subsequently informed the former directors, who were being sued in ongoing misfeasance proceedings, that they would be liable to account to the company for the debts incurred in relation to the discovery assessments in the event that the appeal was unsuccessful. The former directors then asked the liquidator to assign the company’s right to appeal against the discovery assessments to them. The liquidator proceeded to seek the court’s direction as to whether the company’s right of appeal constituted “property” such that it was capable of assignment.

89. [65]

    [65] It was held that a “bare right of appeal” against what would otherwise be a liability did not fall within the scope of “property” in the UK Insolvency Act 1986. Therefore, to assign the right of appeal would be akin to assigning a remedy without the right in respect of which the remedy existed and this would be invalid at law. In arriving at this conclusion, Pelling J made the following observations at [27]–[28]:

90. [66]

    [66] As mentioned above, I am of the view that it would be more appropriate to leave this issue open in the light of the absence of full arguments by both parties. Nevertheless, I acknowledge that the Deed of Assignment in the present case does not appear to relate to property which can be properly regarded as a chose in action. In the House of Lords decision of Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, Lord Hoffman observed at 915C that “a chose in action is property, something capable of being turned into money”. In the present case, the rights purported to be assigned by the OA to the Plaintiffs arose solely by operation of statute. In this respect, the rights conferred on the OA pursuant to ss 76(1)(c) and 105 of the BA do not appear to fall within the scope of a chose in action which is capable of assignment. They amount to bare rights to make certain claims and to obtain the necessary remedies, such as a stay in proceedings, for the sole purpose of administering the bankruptcy. In my view, these are not rights that can be turned into money in and of themselves. They are not likely to fall within the scope of “property” as defined in the BA. It is noted that the observations made here are, in fact, consistent with the view expressed earlier that the powers conferred by ss 76(1)(c) and 105 of the BA are personal to the OA.

91. [67]

    [67] Apart from the issue as to whether the assignment was valid, the Defendant also raised the argument that the prayers sought by the Plaintiffs in OS 601/2013 are much broader than that granted under the Deed of Assignment. Having already found that the rights purported to be assigned are not capable of assignment at law, it would not be necessary for me to make any further observations on this issue. The Plaintiffs do not have the requisite locus standi to commence or maintain the action in OS 601/2013. Although this would be sufficient to dispose of this application entirely, for the sake of completeness, I now turn to consider the remaining objections which seek to attack the grant of leave to serve out of jurisdiction. This will be followed by a discussion of the issues pertaining to res judicata towards the end of this judgment.

92. The procedural objection

93. [68]

    [68] In brief, the procedural objection is based on the Defendant’s assertion that the provisions in the RC are not applicable as OS 601/2013 was commenced under the BA. In this regard, the Defendant has referred to O 1 r 2(2) of the RC, which provides that the RC shall not apply to bankruptcy proceedings commenced under the BA. Accordingly, the Defendant argues that O 11 of the RC was not applicable to the Plaintiffs’ application for leave to serve OS 601/2013 out of jurisdiction.

94. [69]

    [69] Nonetheless, the Defendant has, quite properly, drawn my attention to s 11 of the BA which provides that:

95. In this respect, the question is whether the BA and the Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed) (“BR”) provide a procedure for service of OS 601/2013 out of jurisdiction.

96. [70]

    [70] To this end, it is noted that r 38 of the BR states that:

97. It is, however, clear that r 38 of the BR applies to service of documents out of jurisdiction against the debtor. It does not deal with the situation where the OA (or its assignee) has commenced proceedings under ss 76(1)(c) and 105 of the BA in order to restrain a creditor from continuing with proceedings against the bankrupt, as in the present case.

98. [71]

    [71] In Re Rasmachayana Sulistyo (alias Chang Whe Ming), ex parte The Hongkong and Shanghai Banking Corp Ltd and other appeals [2005] 1 SLR(R) 483 (“Re Rasmachayana Sulistyo”), V K Rajah J (as he then was) had to deal with a similar issue of whether s 11 of the BA could be invoked to supplement the rules in the BR. In that case, the petitioning creditor had obtained judgments against the three judgment debtors who were foreign nationals. When the debtors failed to comply with the terms of the judgment, the petitioning creditor initiated bankruptcy proceedings against them. Prior to the filing of the bankruptcy petitions, the petitioning creditor made multiple attempts to effect personal service of the requisite statutory demands on the debtors. Three different modes of service were relied on by the petitioning creditor in relation to the service of the statutory demands. The bankruptcy petition was, however, only served on the debtors’ nominated forwarding agent. In doing so, the petitioning creditor relied on a clause in the guarantee where it was stated that the debtors irrevocably appointed the nominated forwarding agent to receive service of process for the debtors in any proceedings in Singapore. The learned Assistant Registrar rejected the argument that the bankruptcy petitions were not properly served. In arriving at this decision, the Assistant Registrar held that although O 1 r 2(4) of the RC ex facie precluded the general application of the RC to bankruptcy proceedings, with reference to s 11 of the BA, the petitioning creditor could still apply O 62 r 3(2) of the RC in determining how personal service might be effected since the BR was silent on this issue.

99. [72]

    [72] When the matter came before Rajah J, although the appeals were eventually dismissed, it was held that the Assistant Registrar fell into error by importing wholesale the provisions of the RC into the service of court process aspect of bankruptcy procedure. In this regard, Rajah J made the following observations at [5]:

100. It was further held at [6] that s 11 of the BA should only be resorted to in instances where “lacunae in procedural issues exist, ie, where no specific provision has been made” [emphasis in original]. To this end, s 11 of the BA should not be interpreted as a statutory charter to whimsically fill in any perceived gaps or supposed interstices existing in the BR. A distinction would have to be drawn between circumstances where there is “no specific provision” and that where there is merely a perception of incomplete or inadequate provisions dealing with a particular aspect of procedure. In this respect, s 11 would only be applicable in the former situation where there is an absence of any relevant provision(s).

101. [73]

     [73] Returning to the facts of the present case, the issue then is whether there is “no specific provision” in the BA or the BR governing the service out of jurisdiction with regard to claims made under ss 76(1)(c) and 105 of the BA. At the outset, I note that the facts in the present case are rather different from that in Re Rasmachayana Sulistyo. In the latter case, the issue was in relation to the service of bankruptcy processes, such as statutory demands and bankruptcy petitions. This can be contrasted with the present case where the issue concerns the OA (or its assignee) bringing claims under ss 76(1)(c) and 105 of the BA.

102. [74]

     [74] In this regard, it is observed that Part VI of the BR deals with the following:

103. (a) statutory demand;

104. (b) creditor’s bankruptcy application;

105. (c) service of creditor’s bankruptcy application;

106. (d) hearing of creditor’s bankruptcy application;

107. (e) actions to follow upon making of bankruptcy order on creditor’s bankruptcy application;

108. (f) debtor’s bankruptcy application;

109. (g) actions to follow upon making of bankruptcy order on debtor’s bankruptcy application; and

110. (h) interim receiver.

111. In so far as the actions to follow the making of a bankruptcy order are concerned, reference is only made to:

112. (i) the settlement and contents of the bankruptcy order;

113. (j) the service of the bankruptcy order;

114. (k) the gazetting of the bankruptcy order;

115. (l) the advertisement of the bankruptcy order;

116. (m) the stay of the bankruptcy order; and

117. (n) the amendment of title of proceedings.

118. [75]

     [75] Therefore, it can be seen that the bankruptcy procedures as dealt with in Part VI of the BR appear to be concerned with the proceedings brought in connection with the application and the making of the bankruptcy order against the debtor. On the other hand, the BA and BR appear to be silent on the commencement of proceedings by the OA against creditors and other parties. In this regard, it bears noting that the OA has the power under s 112(b) of the BA to institute and defend proceedings relating to the property of the bankrupt. Where those proceedings are brought, then unless there are specific provisions in the BA or the BR concerning such proceedings, it must follow that reference to the RC is permissible on the basis of s 11 of the BA. Therefore, I find that the Plaintiffs’ reliance on O 11 of the RC in connection with the application for leave to serve OS 601/2013 on the Defendant out of jurisdiction was proper due to the absence of any specific provision in the BA or the BR governing such a procedure.

119. The disclosure objection

120. [76]

     [76] The general principles governing the grant of leave for service out of jurisdiction are well settled. In Siemens AG v Holdrich Investment Ltd [2010] 3 SLR 1007 (“Siemens AG”), the Court of Appeal at [2] adopted the three major considerations stated by Prof Jeffrey Pinsler in Singapore Court Practice 2009 (LexisNexis, 2009) at para 11/2/5. First, the claim must come within the scope of one or more of the paragraphs of O 11 r 1 of the RC. Second, the claim must have a sufficient degree of merit. Third, Singapore must be the forum conveniens. The second and third considerations will be covered in the discussion of the merits objection and the conflicts objection respectively. For present purposes of analysing the disclosure objection, I will address the issue of whether the Plaintiffs did make full and frank disclosure when making the application for leave to serve out of jurisdiction.

121. [77]

     [77] In brief, O 11 r 2 of the RC states that the affidavit filed in support of an application for leave to serve out of jurisdiction must include:

122. [78]

     [78] In this regard, the applicant owes a duty of full and frank disclosure and failure to properly discharge that duty renders any order granted liable to be set aside. The duty of disclosure that is owed relates to the facts which are set out in the supporting affidavit bearing in mind that the applicant has to establish a good arguable case. Copies of documents that are referred to in the affidavit should also be exhibited and the affidavit must also set out sufficient facts to demonstrate that Singapore is the forum conveniens. In deciding whether to grant leave for service out of jurisdiction, O 11 r 2 of the RC provides that the court has to be satisfied that “the case is a proper one for service out of Singapore under this Order”. Given the ex parte nature of the application, the applicant must place all material facts before the court can be so satisfied. It goes without saying that this includes facts which are unfavourable to the applicant’s case because the duty to make full and frank disclosure is not merely a matter of fairness between the parties to the action but it is a duty that is owed to the court. It is driven by the need for the court to satisfy itself that the case is a proper one for service out of jurisdiction.

123. [79]

     [79] The principle that the applicant is under a duty to make full and frank disclosure when making an ex parte application for leave to serve out of jurisdiction is well-established in many local cases. In the oft-cited High Court decision of Transniko Ptd Ltd v Communication Technology Sdn Bhd [1995] 3 SLR(R) 941, Kan Ting Chiu J made the following observations (at [11]–[12]):

124. [80]

     [80] In Principles of Civil Procedure (Academy Publishing, 2013), Prof Jeffrey Pinsler helpfully explains at para 05.012 that where the originating process is to be served out of jurisdiction, the application for leave is necessarily ex parte in nature as the person to be served is not yet a party to the proceedings. It was further emphasised that this necessarily means that the applicant has to be “completely forthcoming about information which could potentially have an adverse effect on his application” [emphasis added]. In this respect, the applicant has the responsibility to exercise the utmost good faith such that the court is able to adjudicate the application fairly and justly. The learned author’s following admonition at para 05.012 is well worth stressing:

125. [81]

     [81] Apart from the general principles traversed above, the Defendant further submits that the heavy burden to make full and frank disclosure is also reflected in the cautious approach towards the applicant who seeks to discharge the burden of disclosure by relying on documents which are merely exhibited in the affidavit. The Defendant’s position is that if the facts are not fairly set out in the body of the affidavit, it will not assist the applicant to point to some exhibit from which the material facts may be extracted. In this vein, the Defendant referred to Steven Gee, Commercial Injunctions (Sweet & Maxwell, 5th Ed, 2004) at para 9.003 where it was stated that:

126. [82]

     [82] I agree with the Defendant’s submissions. What the law requires is for the facts to be fairly stated in the affidavit, such that the court is able, in the context of an ex parte application (which will often be at short notice), to make a fair determination as to whether the case is a proper one for service out of jurisdiction. I agree with the statement in Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep 428 at 437 that the applicant must “identify the crucial points for and against the application, and not rely on general statements and the mere exhibiting of numerous documents”. Similar remarks were also made in National Bank of Sharjah v Dellborg and others [1993] 2 Bank LR 109, where Lloyd LJ stated unequivocally at 112 that in the event the facts are not fairly stated in the affidavit, “it will not assist the plaintiff to be able to point to some exhibit from which that fact might be extracted”.

127. [83]

     [83] Although the authorities and commentaries cited above dealt with the duty of disclosure in the context of applications for injunctions, I am of the view that the general principles are also applicable to applications for leave to serve out of jurisdiction. In this regard, it is apposite to refer to the decision of Lee Hsien Loong v Review Publishing Co Ltd and another and another suit [2007] 2 SLR(R) 453 (“Lee Hsien Loong v Review Publishing”), where Sunderesh Menon JC (as he then was) observed at [58] that there was “no reason in principle why there should be a difference in approach between an application for leave to serve out of jurisdiction ... and one for an injunction”. It was further observed that both situations deal with the consequences of misleading a court to exercise its powers in circumstances where the court would not have had the benefit of opposing counsel due to the ex parte nature of such applications.

128. [84]

     [84] Menon JC also referred to the English High Court decision of Network Telecom (Europe) Ltd v Telephone Systems International Inc [2004] 1 All ER (Comm) 418, where it was held that there was a continuing obligation on an applicant who had been granted leave to serve out of jurisdiction to inform the court of any new circumstances that might have occurred between the time when leave was granted and when process was served. The following observations that were made by Burton J in that case were cited at length by Menon JC in Lee Hsien Loong v Review Publishing (at [58]):

129. With this backdrop of legal principles, I now turn to consider whether the Plaintiffs failed to discharge their duty to make full and frank disclosure when they applied for leave to serve out of jurisdiction.

130. [85]

     [85] In brief, the Defendant’s complaint was that the summary of facts set out in the body of the service affidavit was one-sided and misleading. In this respect, four examples were highlighted and relied upon by the Defendant:

131. (a) While the service affidavit disclosed the proof of debt filed in Singapore, and further asserted that the proceedings undertaken in the HKSAR and India to enforce the judgment were in breach of bankruptcy laws, there was no disclosure that the Mumbai property had been attached more than a year before the bankruptcy orders were made in Singapore.

132. (b) The service affidavit also failed to disclose that the Indian courts had already determined that:

133. (c) The service affidavit failed to mention any of the extensive proceedings in India challenging the execution proceedings.

134. (d) The service affidavit also failed to disclose the numerous steps undertaken by the High Court of Bombay, the Sheriff and the Defendant to execute against and sell the Indian property. Indeed, the process had reached a significantly advanced stage of execution and sale by the end of January 2005 (ie, before the bankruptcy orders were made on 4 February 2005).

135. [86]

     [86] I note that the service affidavit comprised only three pages and nine paragraphs. The key paragraph in which the facts were summarised began with the statement that the full facts could be found in the substantive affidavit (ie, the affidavit filed in support of OS 601/2013).

136. [88]

     [88] The Defendant’s position is that even if the Plaintiffs were allowed to rely on the substantive affidavit to support the application for leave to serve out of jurisdiction, the affidavits (ie, the substantive affidavit and the service affidavit), even when read together, failed to disclose the following material facts:

137. (a) The Deed of Assignment was not disclosed or exhibited in either affidavit.

138. (b) While both affidavits asserted that P2 was a joint owner of the Mumbai property, there was no mention of the fact that the proceedings commenced in India to establish P2’s interest in the Mumbai property had been dismissed for want of prosecution on 1 August 2005.

139. (c) While the service affidavit alleged that the Defendant was in breach of ss 76(1)(c) and 105 of the BA by enforcing the judgment debt in India, the Plaintiffs failed to disclose that those sections did not have any extra-territorial effect and thus did not apply to the execution proceedings that were ongoing in India.

140. (d) While the substantive affidavit referred to the Division Bench’s decision that the HKSAR was not a reciprocating territory, both affidavits failed to mention that the Indian Government subsequently issued the 2012 Gazette Notification, stating that the HKSAR was a reciprocating territory with effect from 1 July 1997.

141. (e) Both affidavits also failed to exhibit any of the court papers or documents filed in relation to the Indian proceedings, thereby concealing the extent and scope of the proceedings that were ongoing in India. There was no mention of the fact that a full set of papers had been filed in relation to the appeals to the Indian Supreme Court, which runs into tens of thousands of pages.

142. (f) Both affidavits made misleading and inaccurate allegations against the Defendant. The following details were set out in the affidavit filed on behalf of the Defendant on 15 October 2013:

143. (i) The allegation in the substantive affidavit that the Defendant, in its application to commence execution proceedings in India, failed to disclose to the High Court of Bombay that execution proceedings had already been commenced in the HKSAR. This was incorrect as the application for execution did disclose the charging of a residential asset belonging to P1 in the HKSAR (viz, the HKSAR property).

144. (ii) The allegation that the Defendant did not disclose the receipt of HK$215,528.07 in partial satisfaction of the judgment debt to the High Court of Bombay and failed to file any revised certificate concerning the same. In response, the Defendant asserts that a revised certificate was filed, with reference being made to a Certificate of Part Satisfaction of Debt issued by the High Court of Bombay on 3 December 2008. That said, it is clear that the filing of the revised certificate only took place about three years after the filing of the original proof of debt. In response, the Defendant explains that the sum received only represented a small portion of the judgment debt and that to date no dividend has been paid in Singapore.

145. (iii) The assertion that it has been seven years since P1 filed the application for a stay of execution in India and that he is still waiting for the matter to be heard by the Indian Supreme Court. The Defendant is of the view that this is misleading as P1 failed to disclose that there are presently three appeals before the Indian Supreme Court and that all three appeals have been fixed to be heard together. The Defendant further asserts that the length of time with regard to the Indian proceedings is due to the numerous applications and appeals taken out by the Plaintiffs.

146. (iv) The assertion by P1 that despite the fact that the Indian Supreme Court had made an ad-interim order on 3 March 2006 staying execution of the final documents of sale with respect to the Mumbai property, the Defendant still commenced execution by way of a Sheriff auction. The Defendant asserts that this is misleading as the Indian Supreme Court’s actual order was to allow execution proceedings to continue, with the sole qualifier that final sale should not be executed against the Mumbai property while the appeal was still pending.

147. (v) The allegation that the Defendant and ING Bank “acted in cahoots” in drafting the consent order in respect of ING Bank’s application and that the Division Bench had refused to accept the consent order on record. The Defendant asserts that this was untrue and that, in any event, no consent order would have bound P1 in the absence of his consent. The Division Bench decided that it could not accept the consent order on record given that the OA had refused to consent to P1 being a party to the consent order.

148. [89]

     [89] In the present case, the service affidavit was filed one day before the order was granted on an ex parte basis. The substantive affidavit does not appear to have been set out as an exhibit in the service affidavit although it is likely that the substantive affidavit would have been accessible through the eLitigation system. Nonetheless, the Defendant’s position is that the learned Assistant Registrar who granted the order may not have had the opportunity to review the substantive affidavit although it was referred to in the service affidavit. Whether the learned Assistant Registrar did in fact have the opportunity to review the substantive affidavit is not an issue that I am able to make a conclusive finding on, given the state of the evidence before me. Nevertheless, I am of the view that the service affidavit should have, at the very least, highlighted the areas of the substantive affidavit which are of especial importance.

149. [90]

     [90] For the avoidance of doubt, I acknowledge that the substantive affidavit does set out some of the important facts which are relevant to the decision of whether to grant leave to serve out of jurisdiction. This includes, inter alia, the fact that the warrant of sale was levied on the Mumbai property on 21 May 2004, and that a public notice inviting offers was issued on 20 April 2005. Other material facts concern information regarding the state of the Indian proceedings, such as the decision of the High Court of Bombay to refuse a stay of the execution proceedings on the basis of the bankruptcy order granted in Singapore (which is now on appeal to the Indian Supreme Court). In this respect, I am of the view that, at the very least, the service affidavit should have drawn the attention of the court to these material points mentioned above, leaving the details to be gleaned from a closer reading of the substantive affidavit. Whether the material facts must always be set out (and in what detail) in the body of the service affidavit depends on the circumstances of each case. That said, it bears emphasising that the more important the facts and the more complicated the background circumstances are, the greater the need for care to be taken in complying with the duty of full and frank disclosure.

150. [91]

     [91] In any event, while the substantive affidavit did refer to the legal proceedings in India, the Deed of Assignment through which the Plaintiffs claim to have acquired the right to commence OS 601/2013 was not referred to or exhibited in both affidavits. It bears emphasising that the applicant, for leave to serve out of jurisdiction, is required to disclose all materials facts that may potentially have an impact on the court’s decision. In this regard, the applicant cannot rely on the argument that the court would have arrived at the same decision even if disclosure had been made in the first place.

151. [92]

     [92] To be clear, it is acknowledged that the Plaintiffs have, in the substantive affidavit, referred to some of the legal proceedings in India. Nevertheless, as a whole, I am of the view that the level of disclosure was inadequate in so far as the extent and scale of the proceedings in India were concerned. Having failed to adequately discharge their duty of full and frank disclosure, the order granting the Plaintiffs leave to serve OS 601/2013 out of jurisdiction is thereby set aside.

152. The merits objection

153. [93]

     [93] Apart from the material non-disclosure on the part of the Plaintiffs, the Defendant also submits that the service order should not have been granted on the basis that the Plaintiffs failed to establish a good arguable case on the merits of the case. In this respect, the Defendant refers to the following passage from Singapore Civil Procedure at para 11/1/8:

154. [94]

     [94] The learned author of Principles of Civil Procedure also helpfully explains at para 05.013 that the plaintiff must be able to positively show “a good arguable case” that the facts on which the claim is based can be brought within one of the limbs of O 11 r 1. In this latter respect, the court is concerned with whether jurisdiction has been established and not with whether the claim meets a particular level of merit. However, at this stage, the plaintiff must still at least show that there exists a “serious issue” for adjudication, a criteria which will often be apparent from the facts which establish the ground of jurisdiction.

155. [95]

     [95] In determining whether the plaintiff has overcome the threshold of proving a good arguable case to establish jurisdiction, it is insufficient if it is merely demonstrated that the claim has a prospect of success. Further, these principles must be applied bearing in mind the particular limb of O 11 r 1 that the applicant relies on. In the present case, the Plaintiffs have relied on the following limbs:

156. (a) para (p) – the claim is founded on a cause of action arising in Singapore;

157. (b) para (r) – the claim is in respect of matters in which the defendant has submitted or agreed to submit to the jurisdiction of the Court; and

158. (c) para (s) – the claim concerns the construction, effect or enforcement of any written law.

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