Woon Tek Seng and Another v V Jayaraman a/l V A Vellasamy and Another

[1] This is an appeal against the decision of District Judge Toh Han Li (“DJ Toh”) which dealt with the principles of court-directed case management and the plaintiffs’ right to recommence a suit that had been deemed discontinued by the Rules of Court (“Rules”).

[2] The plaintiffs maintain that they have an absolute right to commence a fresh action notwithstanding the reinstatement procedure under O 21 r 2(8) (see [12]). The 1 defendant submits that this is an abuse of process, an attempt to bypass the reinstatement procedure and a re-litigation of matters already decided in the action deemed to have been discontinued (“discontinued suit”).

[3] In the proceedings below, the Deputy Registrar struck out the plaintiffs’ action on the basis that it was an abuse of process and dismissed the plaintiffs’ application for interlocutory judgment. DJ Toh affirmed the decision of the Deputy Registrar. I allowed the plaintiffs’ appeal against (a) the order striking out the plaintiffs’ action (RAS72/2007/E); and (b) the dismissal of the plaintiffs’ application for interlocutory judgment (RAS71/2007/A).

[4] Woon Tek Seng @ Woon Wee Seng (“1 plaintiff”), Rahimah Binti Haji Hashim (“2 plaintiff”) and V Jayaraman A/L V A Vellasamy (“1 defendant”) are the shareholders of the 2 defendant, Singa Motivasi (M) Sdn Bhd (the “company”). The shares they hold in the company are in the following proportions: 29% (1 plaintiff), 21% (2 plaintiff) and 50% (1 defendant).

[5] It was agreed that the company would purchase a property and the 1 defendant would contribute 50% of the purchase price which would include payment of mortgage instalments. The company proceeded to purchase the property and obtained financing from a bank. The plaintiffs and the 1 defendant became the joint and several guarantors for the company for the bank’s mortgage under a written guarantee dated 26 May 1997. When the company defaulted on the mortgage payments, the plaintiffs settled the outstanding amounts with the bank.

[6] The plaintiffs then commenced two suits (MC Suit No 28 of 1998 and DC Suit No 50727 of 1999) to recover contribution from the 1 defendant. The MC Suit was for contribution towards one payment by the plaintiffs. The DC Suit was for further contribution after the plaintiffs made further payments to the bank on the same guarantee. Interlocutory judgments for the MC Suit and DC Suit were obtained on 20 May 1998 and 22 September 1999 respectively for the 1 defendant’s contribution to be assessed as co-surety under the guarantee. On 22 September 1999, the two suits were consolidated. The assessment under the consolidated suit never took place because the automatic discontinuance rules kicked in subsequently.

[7] DJ Toh erred in concluding that the last step in the consolidated suit was on 28 March 2001 when the 1 defendant withdrew his appeal against the Deputy Registrar’s orders on the plaintiffs’ summons for directions. On a close scrutiny of the court’s records, I found that the last step was in fact taken on 5 September 2003 when the court heard and granted the application by United Merchant Finance Bhd to cease as a party to the consolidated suit. For more than a year thereafter, no remaining party took any further steps in the consolidated suit. Pursuant to O 21 r 2(6), the consolidated suit was deemed discontinued one year later, namely on 6 September 2004. Order 21 r 2(6) to (6B) reads:

[8] The present action was commenced on 31 March 2006, some 1½ years after the deemed discontinuance and 2½ years after the last step. The present claims are substantially the same as those in the discontinued suit, and are for contribution from the 1 defendant as co-surety for all the sums paid by the plaintiffs to settle the entire amount under the guarantee.

[9] The rationale behind the automatic discontinuance rules was discussed in Tan Kim Seng v Ibrahim Victor Adam [2004] 1 SLR 181. The Court of Appeal said at 184-188 that:

[10] It is settled law that the rules on automatic discontinuance remain applicable to the stage of assessment of damages after interlocutory judgment has been obtained until the action is brought to completion, ending with a judgment that is enforceable. Counsel for both parties rightly acknowledge that on the facts of this case, the consolidated action (for which two interlocutory judgments were obtained prior to consolidation) had been deemed discontinued pursuant to O 21 r 2(6), which is also the status shown in the court records.

[13] The applicable guidelines governing reinstatement of a discontinued action were set out by Judith Prakash J in Moguntia-Est Epices SA v Sea-Hawk Freight Pte Ltd [2003] 4 SLR 429 (“Moguntia”). In summary, they are as follows:

(a) whether the plaintiff is innocent of any significant failure to conduct the case with expedition prior to the trigger date (i.e. the date of the last step in the action).

(b) whether his failure to take any step in the action since the trigger date is excusable.

(c) whether the balance of justice indicates that the action should be reinstated.

[14] If the answer to any of the above questions is in the negative, then reinstatement will most likely be refused.

[15] The above guidelines have their origins in the case of Rastin v British Steel plc [1994] 2 All ER 641 (“Rastin”) where the Court of Appeal had to consider the proper approach to an application to reinstate an action in an English Country Court after the action had been automatically struck off. Saville LJ in Bannister v SGB plc [1997] 4 All ER 129 later reconsidered and simplified the guidelines set out in Rastin, which formed the basis of those very helpful guidelines laid down by Prakash J.

[16] In Moguntia ([13] supra) at [21], Prakash J further said that:

[20] Having regard to the above, should a court dictate to a plaintiff that he must start first with a reinstatement application, and only if he fails, will he be allowed to commence a fresh action? This appeared to be what DJ Toh indicated to the plaintiffs in the present case: see [26] and [27] of DJ Toh’s decision, where he struck out the fresh action, gave the plaintiffs liberty to apply for reinstatement of the previous consolidated action and made clear at the same time that he was not closing the door to a scenario of the plaintiffs filing a fresh action after a failed reinstatement application. I disagree that the plaintiffs, who never applied for any reinstatement under O 21 r 2(8) in the first place, should be made to go through such a convoluted process. Neither is there such a mandatory sequential procedure prescribed in the Rules for actions which have been automatically deemed discontinued.

[21] In my judgment, it is for the plaintiff to evaluate carefully the courses of action legally available to him after his action is deemed discontinued, including his own chances of success with each course of action. The decision is for the plaintiff to make. The consequences are his to bear. If the plaintiff is not minded to apply for reinstatement, it is not for the court to compel him to take the reinstatement route by striking out his fresh action, with liberty given to him to start a fresh action upon his failure to obtain reinstatement.

[22] I turn now to consider the right of a plaintiff to commence a fresh action after an automatic discontinuance (or for that matter, after a failed application for reinstatement).

[23] As Prakash J had said that reinstatement applications should be the exception rather than the rule, there is much force in the contention by counsel for the plaintiffs that consequently, the normal course of action for a plaintiff to take after an automatic discontinuance is to apply for a fresh action (provided the time bar has not set in). This appears to be supported by Para 21/5/17 of the Singapore Civil Procedure 2007 at 385 which states that:

[24] Counsel for both parties do not dispute that there is no prohibition in the Rules against a plaintiff recommencing the same or substantially the same action after an automatic discontinuance. It must also be borne in mind that no leave of court is required to issue a fresh writ action under O 6, whether or not there has been an earlier automatic discontinuance.

[25] As such, the proper question in my view is not whether the plaintiff has the right to commence the fresh action but whether the fresh action is liable to be struck out under the inherent powers of the court or under O 18 r 19.

[26] The next obvious question is whether the principles for reinstatement are the same as those for striking out a recommenced action under O 18 r 19? In my view, they are quite different, though some of the relevant factual considerations may be applicable to both reinstatement and striking out. It is therefore important to recognise that the Rastin guidelines as modified by Prakash J for determining reinstatement are not quite the same as the well-known principles for striking out.

[28] Ms Lim Hui Min (“Miss Lim”) in her article Automatic Discontinuance under Order 21 Rule 2, First Dormant, then Dead (2001) 13 S Ac LJ 150 discusses the commencement of fresh proceedings after deemed discontinuance at 184-185 as follows:

[29] The above discussion must be seen in the context of a striking out application made after the fresh action has commenced. Technically, there is no prohibition as such against the commencement of any fresh action (even when the time bar defence exists) by way of issuing and serving a fresh writ, except that the fresh action (just as it is with any other action) may be struck out if the grounds for striking out can be made out by the defendant.

[30] Order 18 r 19 provides that:

[31] The courts clearly have the power to exercise its discretion to strike out any recommenced action if it finds that any of the grounds (a) to (d) above are made out by the defendant. In deciding whether grounds (b), (c) or (d) are made out, all the relevant facts and circumstances of the case must be considered. Each case must be decided on its own set of facts and circumstances.

[32] I shall now deal with the 1 defendant’s application to strike out the fresh action under O18 r 19. The main grounds relied on by the 1 defendant are limbs (a), (b) and (d) of O 18 r 19 that the plaintiffs’ fresh action does not disclose a reasonable cause of action, is scandalous, frivolous or vexatious and/or is an abuse of the process of the court.

[33] As interlocutory judgments had been successfully obtained before the consolidated action was deemed discontinued, it can hardly be said that the present action, based largely on the same cause of action, is scandalous, frivolous or vexatious. Clearly, a reasonable cause of action has been disclosed. Hence, I shall now deal primarily with the issue of whether there has been an abuse of the process of the court under limb (d) of O18 r 19.

[34] Belinda Ang J. in Kwa Ban Cheong v Kuah Boon Sek and others [2003] 3 SLR 644 (“Kwa Ban Cheong”) said at [25] and [27] that:

[35] The case of Ansa Teknik (M) Sdn Bhd v Cygal Sdn Bhd [1989] 2 MLJ 423 cited to me is one example where even the motive behind the plaintiff’s actions was a circumstance taken into account. There the plaintiffs discontinued their action for a debt after the defendant had been given unconditional leave to defend, and commenced winding up proceedings against the defendants in respect of the same debt. Vohrah J ruled that the plaintiffs had abused the court process by employing the winding up procedure to embarrass the defendants and to circumvent the normal course of going to trial on the debt, which on the evidence showed a bona fide dispute. Accordingly, Vohrah J struck out the winding up petition.

[36] Hence, all relevant facts and circumstances must be considered before the court exercises its discretion to strike out a fresh action commenced after an automatic discontinuance on the ground that it is an abuse of process. The jurisdiction to strike out a statement of claim, whether under the Rules or under the inherent jurisdiction of the court, is only exercised in a plain and obvious case: see Ching Mun Fong (executrix of the estate of Tan Geok Tee, deceased) v Liu Cho Chit and another appeal [2000] 1 SLR 517 at [12] of the decision of the Court of Appeal.

[37] It is trite law that the court’s power to strike out an action is a draconian one, and should not be exercised too readily unless the court is convinced that the plaintiffs’ case is wholly devoid of merit: Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin & Ors [1998] 1 SLR 374. The Court of Appeal explained at [22] that:

[38] In Kwa Ban Cheong ([34] supra) at [29] , Belinda Ang J said:

[39] Is it per se an abuse of the process of the court if the plaintiff chooses not to proceed with the reinstatement application but starts immediately with a fresh action? I do not think so. As I have stated before, there is nothing in the Rules which expressly preclude him from starting a fresh action after a deemed discontinuance under O 21 r 2 (6) without first applying for reinstatement. Second, the availability of a fresh action on the same or substantially the same cause of action or in short, a “recommencement” after a deemed discontinuance is in my view a part of the legal process. The effect of the deemed discontinuance is that the action is merely deemed to have ceased, not dismissed. Hence, there is no res judicata and a fresh suit may be commenced on the same facts.

[40] As such, I cannot see how the bona fide use of an available process of recommencement for the first time after the deemed discontinuance is an abuse of process. Of course, if the plaintiff repeatedly allows the matter to be discontinued and repeatedly starts a fresh action each time without any good reason, I will be inclined to find that an abuse of the court process has taken place and strike out the fresh action on an O18 r 19 application by the defendant on the basis that the repeated litigation on the same subject matter was not brought bona fide for the legitimate purpose of accessing the courts to secure for himself an enforceable judgment on the basis of a valid claim, but for some ulterior or collateral purpose which is to unjustly harass, vex or oppress the defendant and to put him through unwarranted anxiety and expense. However, the present case before me is nowhere near the hypothetical factual scenario I painted.

[41] Can the fresh action be struck out for abuse of process simply on the basis that the same issues were litigated previously in the discontinued suit? I do not think so. O 21 r 4 provides that the fact that the plaintiff is deemed to have discontinued an action shall not be a defence to a subsequent action for the same, or substantially the same, cause of action. This clearly indicates to me that the commencement of a fresh action with the same or substantially the same claims as the one that was automatically discontinued is per se not an abuse of process since the Rules have expressly ruled that out as an available defence.

[43] Order 92 r 4 states:

[44] I have also examined whether or not the 1 defendant has suffered any injustice by the plaintiffs taking out a fresh action after a deemed automatic discontinuance having regard to all the relevant facts and circumstances of this case. The burden again is on the 1 defendant to show what injustice he has suffered and he has failed to discharge it. Since there has also been no abuse of the process of the court (see [34] to [42]), there is no reason for me to exercise my inherent powers to strike out the plaintiffs’ fresh action.

[45] The 1 defendant contends that the plaintiffs are precluded from bringing this action by reason of the doctrine of res judicata, issue estoppel or abuse of process because the present suit is substantially on the same issues as the discontinued suit. With interlocutory judgments entered against the 1 defendant, the issue of liability had been determined. As such, the 1 defendant argues that the plaintiffs are now estopped and precluded form re-litigating the issue of liability. Essentially, the 1 defendant is saying that on the facts of this case, the plaintiffs’ fresh action should be struck out as an abuse of process because res judicata or issue estoppel operates. I disagree. There is no issue estoppel as the plaintiffs are not re-litigating an issue that has been decided against them. See [56]. On the contrary, the liability issue has been determined in the plaintiffs’ favour. Second, as the action ended in a discontinuance, not all the rights in the action have been finally disposed of and res judicata is not applicable to bar a fresh action on the same, or substantially the same facts. If the 1 defendant is correct that res judicata applies, then every such fresh action must be struck out and essentially, no action can ever be started by a plaintiff in all cases of automatic discontinuance, including those triggered after interlocutory judgment has been obtained. In my view, the plaintiff in such a case will be severely prejudiced by his mere inaction for more than a year, which precipitates an automatic discontinuance. Automatic discontinuance rules are not meant to operate in a way that creates injustice. It is simply too draconian to deny a plaintiff the chance to restart an action after automatic discontinuance, in particular where the merits of the plaintiff’s case are amply borne out by the interlocutory judgments earlier obtained in the discontinued action.

[46] Counsel for the plaintiffs cited the following cases to show that the plaintiffs have a right to commence a fresh action unless the discontinuance is done on terms which prohibit the commencement of a fresh action.

[47] In Tong Guan Food Products Pte Ltd and Others v Teo Cheow Ngoh and Another [2004] SGHC 261 Woo Bih Li J observed in dealing with the defendant’s contention that the plaintiff’s second suit was an abuse of process:

[48] Hendrawan Setiadi v OCBC Securities Ltd and Others [2001] 4 SLR 503 was a case where the plaintiff applied under O 21 r 3 for leave to discontinue the action. Order 21 r 3 states as follows:

[51] However in cases of automatic discontinuance under the Rules, which do not expressly prohibit any fresh action, the plaintiff should also have a similar “right” to commence a fresh action based on the same facts and the same causes of action by way of analogous reasoning. If so, then it will be quite an absurdity that exercising that “right” can per se amount to an abuse of process such that the fresh action should be struck out.

[52] DJ Toh at [20] of his decision disagreed with the submission of plaintiffs’ counsel that in commencing a fresh action, the plaintiffs do not need to explain the reasons for their dilatoriness which led to the discontinuance. In other words, they have an absolute right to recommence fresh proceedings. DJ Toh said:

[53] I do not think that the above reasoning is correct for several reasons. First, DJ Toh incorrectly assumed that the period of inaction was 5 years when it was in fact only about 2½ years. This in part influenced his decision. Second, this is an application to strike out the plaintiffs’ fresh action, where the burden is not on the plaintiffs but on the 1 defendant to show that there is an abuse of process. This is not an application by the plaintiffs for reinstatement of the discontinued suit, in which case it is the plaintiffs’ burden to show that they satisfy the Rastin guidelines and they have good reasons for the delay in prosecuting their action. By faulting the plaintiffs’ reticence to explain their dilatoriness, it appears that DJ Toh placed the burden on the plaintiffs when it should be on the 1 defendant to establish that there is an abuse of process on the part of the plaintiffs to strike out the fresh action. Obviously, when the plaintiffs do not have any good reasons, they will not attempt to give any explanation. That is probably why the plaintiffs here did not apply for reinstatement where they would be hard put to justify their inaction. They decided in their own best interest to start a fresh action, where the burden is then placed on the 1 defendant to establish a case of abuse of process. Third, if the plaintiffs are forced to apply for reinstatement (which is not likely to succeed), and then start a fresh action after reinstatement fails, it is going to involve far more delay in my view. Hence, I do not think it is ludicrous under the circumstances for the plaintiffs’ counsel to submit that it is more expeditious for them to commence a fresh action. At the appeal, counsel for the plaintiffs stated in their submission that the delays were occasioned not so much by the inaction of the plaintiffs but by the change of counsel, and also by the then counsel’s mistaken view of the law that the automatic discontinuance provisions were not applicable to the consolidated action since interlocutory judgments had been obtained. As these were from the bar and not put on affidavit, I disregarded them. In any event, these are poor excuses. I cannot see how a change of counsel within the firm handling the file or even a change of the firm of solicitors handling the matter can account for inaction for 2½ years. The second excuse is worse. Is counsel saying that because he thought the automatic discontinuance provisions do not apply he can then adopt a lackadaisical attitude and take as long as he likes to take the next step in the proceedings? If these reasons were advanced for a reinstatement hearing, I would not have allowed a reinstatement. Fourth, even if there were dilatoriness, lethargy and absence of good excuses on the part of the plaintiffs which resulted in an automatic discontinuance, such conduct must not be equated with wilful or contumacious disobedience such that the subsequent fresh action should be struck out by the court. For this proposition, the case of Gardner v Southwark L.B.C. (No.2) (CA) [1996] 1 W.L.R. 561 (“Gardner”) is particularly pertinent. The Court of Appeal in Gardner dealt with three appeals: two cases where the actions were automatically struck out, the subsequent reinstatement applications failed, and fresh actions were filed; and one case where the action was automatically struck out, no reinstatement application was made, and a fresh action was filed. The courts below struck out the plaintiffs’ fresh actions in all three cases. The common issue in the three cases before the Court of Appeal was whether a second action, having the same reliefs as the first action and commenced within the limitation period after the plaintiff suffered an automatic striking out of his first action under Ord 17, r.11 of the County Court Rules 1981 in UK, was liable to be struck out in its turn as an abuse of the process of court. The Court of Appeal held that it was not and allowed all three appeals. Waite LJ said at 567:

[54] Sir Thomas Bingham MR agreed with Waite L.J. and added at 570:

[55] The plaintiffs applied for interlocutory judgment on their fresh action (the present action) on three independent grounds, namely:

(a) that the 1 defendant is estopped from disputing his liability to pay the plaintiffs’ contribution, to be assessed, as due from the 1 defendant as co-surety under the guarantee, which has been previously determined by the court in two interlocutory judgments in favour of the plaintiffs;

(b) that the 1 defendant has admitted his liability to pay the plaintiffs contribution as due from the 1 defendant as co-surety under the guarantee; and

(c) that there are merits in the plaintiffs’ application based primarily on the terms of the guarantee signed by the plaintiffs and the 1 defendant as guarantors for the company’s mortgage to the bank.

[56] Issue estoppel precludes a party from contending the contrary of any precise point which, having once been distinctively put in issue, has been finally determined against him: see Xiamen International Bank & Ors v Sing Eng (Pte) Ltd [1993] 3 SLR 228 at 234. Here the issue of liability has been previously determined against the 1 defendant as a result of the two earlier interlocutory judgments on the same or largely the same claims, saving the issue of the quantum of contribution for the assessment. Hence, the 1 defendant is estopped from raising any issue in his defence to the contrary that he is not liable for contribution. Apart from the defence of abuse of process in commencing the fresh action (which has failed), he cannot now dispute his liability for contribution in the substantive defences he has pleaded in the present action, though he is not estopped from disputing the quantum of his contribution at the assessment. Accordingly, I granted interlocutory judgment for the 1 defendant’s contribution to be assessed.

[57] In the result, I allowed the two appeals by the plaintiffs and dismissed the 1 defendant’s striking out application and entered interlocutory judgment for the plaintiffs’ claim in this recommenced action.