Mycitydeal Ltd (trading as Groupon UK) and others v Villas International Property Pte Ltd and others

Choo Han Teck J:

[3] The plaintiffs in this case are Groupon entities in various parts of the world. Groupon is a deal-of-the-day website that connects merchants and consumers by offering goods and services at discounted prices. The consumers usually purchase “coupons” through the respective website of each plaintiff, and subsequently redeem them from the merchants. The defendants are one of the merchants that deal with the plaintiffs. The third and fourth defendants are the shareholders and directors of the first defendant. They are in the business of promoting vacation packages in Thailand and Indonesia.

[4] The first and second defendants entered into agreements with various properties in Thailand and Indonesia to promote vacation packages. They subsequently approached the plaintiffs to promote and sell these vacation packages online. The mechanism of the arrangement is as follows:

(a) first, the consumer purchases a coupon for a vacation package via one of the plaintiffs’ websites;

(b) second, the respective plaintiff sends an e-mail to the consumer, attaching a copy of the coupon as evidence of the consumer’s purchase;

(c) third, the consumer then contacts the defendants directly to book his or her vacation package, by citing a code that is contained in the coupon received via e-mail; and

(d) fourth, once the consumer’s booking has been confirmed, the coupon is deemed to have been validly redeemed. The defendants would then log in to the corresponding plaintiff’s “Partner Portal” to input details of the coupons redeemed. At this point, pursuant to the agreement entered into between each of the plaintiffs and the defendants, the corresponding plaintiff will be required to make payment to the defendant within seven to ten working days.

[5] Parties first appeared before the High Court as a result of the plaintiffs’ suit against the defendants. The plaintiffs filed their writ of summons on 5 April 2012. One of their allegations was that the defendants had breached their agreement with each of the plaintiffs, as evinced by several customers having failed to secure their vacation packages through the defendants (the plaintiffs alleged 1998 coupons were sold, of which 743 were refunded). They also alleged conspiracy and fraud on the part of the defendants. The plaintiffs subsequently applied for, and were granted (on 10 April 2012), a mareva injunction against the defendants, which prohibited the latter from disposing of assets up to the value of $2,000,000. This injunction was discharged on 20 May 2013. On 21 June 2012, the defendants filed their defence. They amended it on 24 October 2012 and included a counterclaim, in which the first defendant argued the various plaintiffs owed it a total sum of $290,552.86 (which was the amount due after the defendants had input details of the coupons redeemed on each of the plaintiffs’ “Partner Portal”).

(a) that the first defendant was no longer a going concern (which was not contested by counsel for the defendants); and

(b) that the first defendant was not operating at its registered address.

[9] The first defendant, in reply, argued that security should not have been ordered as:

(a) the application for security was taken out very late by the plaintiffs (a point raised by AR Khng as well); and

(b) the plaintiffs’ failure to pay the sum owing to the defendants (which was the subject of the counterclaim) was the very reason for the first defendant’s cash flow problems (this was disputed by the plaintiffs before AR Khng, and before me as well).

[11] Before me, the arguments from either side were largely the same as those presented below. I repeat AR Khng’s concerns, and find that there are three key issues before this court, namely:

(a) the delay;

(b) the conduct of the plaintiffs throughout these proceedings; and

(c) the first defendant’s financial situation.

[15] Third, and related to the second point, an order for security may stymie the first defendant’s counterclaim. It is undisputed between parties that the first defendant is facing financial difficulties. The plaintiffs rely on the first defendant’s financial situation in mounting their appeal. While I agree that the first defendant’s impecuniosity is a relevant factor to take into account, not to mention grounds upon which s 388 may be invoked, the court must also consider the first defendant’s legitimate concerns, namely whether allowing an order for security would stymie the first defendant’s claim (see Creative Elegance at [31] – [34]). The first defendant’s counsel argued that, on the whole, the plaintiffs’ conduct was indeed calculated to stymie the first defendant’s counterclaim (based on their late application for security). In reply, the plaintiffs argued that “whether the plaintiffs were trying to stymie the [defendants’ counterclaim] has to be viewed in light of the merits of the [defendants’ counterclaim] and the strength of the [plaintiffs’ defence]”. In an interlocutory application such as this, the court should not conduct a detailed examination on the merits. An examination of each party’s pleaded case, however, was sufficient to show that the first defendant’s counterclaim is not without merit. More importantly, based on the history of proceedings thus far – notably the conduct of the plaintiffs – as well as the first defendant’s financial situation, I am of the view that an order for security would indeed stymie the first defendant’s counterclaim.