HYFLUX LTD (IN COMPULSORY LIQUIDATION) & 37 Ors v LUM OOI LIN

"I therefore order that the plaintiffs furnish security for the defendant’s costs for the period until the filing and/or exchange of affidavits of evidence-in-chief by way of an undertaking to the court jointly by OB and OBS, which I have abbreviated as ‘the Undertaking’ above." — Per Goh Yihan JC, Para 3

Case Information

• Citation: [2023] SGHC 113 (Para 0)
• Court: In the General Division of the High Court of the Republic of Singapore (Para 0)
• Date of Judgment: 28 April 2023 (Para 0)
• Coram: Goh Yihan JC (Para 0)
• Case Number: Suit No 267 of 2022 (Registrar’s Appeal No 42 of 2023) (Para 0)
• Area of Law: Civil Procedure — Costs — Security (Para 0)
• Counsel for the plaintiffs: Kenneth Tan SC (Kenneth Tan Partnership) (instructed), Ng Ka Luon Eddee, Leong Qianyu, Teo Jin Yun Germaine and Gitta Priska Adelya (Tan Kok Quan Partnership) (Para 52)
• Counsel for the defendant: Jaikanth Shankar, Rajvinder Singh Chahal, Stella Ng Yu Xin and Sheiffa Safi Shirbeeni (Davinder Singh Chambers LLC) (Para 52)
• Judgment length: The extraction does not state the page count or word count, and that is not answerable from the provided material.

Summary

This appeal concerned only the form of security for costs, not whether security should be ordered or the amount of security, because the parties had already agreed on the quantum at $90,000. The plaintiffs sought to provide security by way of an undertaking from their litigation funders, Omni Bridgeway Limited and Omni Bridgeway (Singapore) Pte Ltd, while the defendant insisted on a solicitor’s undertaking. The court held that there is no fixed form of security for costs under the applicable rules and that the plaintiffs had shown the proposed undertaking was adequate. (Para 4) (Para 5) (Para 6) (Para 10) (Para 12)

The judge framed the dispute as one about the “form of the security” and applied a two-part principle: the plaintiff is not restricted to any fixed form of security, and the plaintiff bears the burden of showing that the proposed form is adequate. In assessing adequacy, the court focused on whether the security provided a fund or asset against which the defendant could readily enforce an order for costs if necessary. The judge concluded that the undertaking met that standard because OB and OBS had substantial assets, the undertaking was enforceable, and there was little risk of satellite litigation. (Para 2) (Para 9) (Para 12) (Para 28) (Para 40) (Para 44) (Para 49)

The appeal was therefore allowed, and the plaintiffs were ordered to furnish security by way of the undertaking jointly by OB and OBS for the period until the filing and/or exchange of affidavits of evidence-in-chief. The court also directed the parties to attempt to agree on costs for the appeal, failing which they were to file short written submissions. The judgment is significant because it articulates the Singapore approach to non-traditional forms of security for costs and confirms that a litigation funder’s undertaking may suffice where it is shown to be practically enforceable and commercially reliable. (Para 3) (Para 50) (Para 51) (Para 49)

What Was the Real Dispute Before the High Court?

The judge made clear at the outset that the appeal was not about whether security for costs should be ordered in principle, but about the form that security should take. The plaintiffs were appealing against the Senior Assistant Registrar’s decision on the form of security, and the judge expressly stated that the “real dispute” was as to the form of the security. That framing mattered because it narrowed the analysis to whether the proposed undertaking was adequate, rather than reopening the underlying entitlement to security. (Para 1) (Para 2) (Para 9)

"In essence, the plaintiffs are appealing against the learned SAR’s decision as to the form of the security." — Per Goh Yihan JC, Para 2

The procedural posture was also important. The Senior Assistant Registrar had ordered security in a hierarchy of possible forms, beginning with a costs undertaking jointly by OB and OBS on terms satisfactory to the defendant, then a banker’s guarantee, then a solicitor’s undertaking, and finally payment into court if the parties could not agree. The High Court appeal therefore required the judge to decide whether the plaintiffs’ proposed undertaking should be accepted as the operative form of security. (Para 1)

The parties had already agreed on the quantum of security, which was $90,000. That agreement removed any need for the court to assess the amount and allowed the judge to focus entirely on the adequacy of the proposed mechanism. The judgment repeatedly returns to this point, because the adequacy inquiry under Order 23 rule 2 is not about the amount alone, but about whether the chosen form gives the defendant a realistic and enforceable source of recovery. (Para 4) (Para 10) (Para 12)

How Did the Court Approach the Governing Rules on Security for Costs?

The court began with Order 23 rule 1(1) of the Rules of Court 2014, which empowers the court to order security for costs if, having regard to all the circumstances, it thinks it just to do so in one of the specified situations. The judge then turned to Order 23 rule 2, which governs the manner of giving security and states that the security shall be given in such manner, at such time, and on such terms as the court may direct. The judge also noted the equivalent reference to Order 9 rule 12 of the Rules of Court 2021. (Para 8) (Para 9) (Para 10)

"O 23 r 1(1) provides that if, having regard to all the circumstances of the case, the court thinks it is just to do so, then it may order security for costs in any one of four specified situations." — Per Goh Yihan JC, Para 9

"Manner of giving security (O.23, r.2) 2. Where an order is made requiring any party to give security for costs, the security shall be given in such manner, at such time, and on such terms (if any), as the Court may direct." — Per Goh Yihan JC, Para 10

From those provisions, the judge drew the central point that Order 23 rule 2 does not prescribe a particular form of security. The court therefore has a wide discretion to order security in any form it deems fit. This was the doctrinal foundation for rejecting any suggestion that the defendant could insist, as a matter of right, on a solicitor’s undertaking or some other conventional form. The analysis was not about whether a particular form is familiar, but whether it is adequate in the circumstances. (Para 10)

The judge then distilled the principles into two propositions for ease of application: first, the plaintiff is not restricted to any fixed form of security for costs; second, the plaintiff bears the burden of showing that the proposed form is adequate. The court further explained that adequacy means whether the proposed security provides a fund or asset against which a successful defendant can readily enforce an order for costs. This formulation became the controlling test for the rest of the judgment. (Para 12) (Para 28)

"To my mind, these principles can be reduced to two for ease of application: (a) the plaintiff is not restricted to any fixed form of security for costs; and (b) the plaintiff bears the burden of showing that the proposed form of security is ‘adequate’" — Per Goh Yihan JC, Para 12

What Did Each Side Argue About the Undertaking?

The plaintiffs’ position was that they could provide security by way of an undertaking from their litigation funders, OB and OBS. They argued that the undertaking provided adequate protection and did not impose an unacceptable disadvantage on the defendant. They also emphasised that the undertaking was an irrevocable and unconditional promise and was akin to a bank guarantee. In substance, the plaintiffs sought to show that the undertaking functioned as a real commercial assurance rather than a merely aspirational promise. (Para 5)

"The plaintiffs’ position is that they can provide security by way of an undertaking from their litigation funders, OB, and OBS. In particular, the plaintiffs argue that the Undertaking provides adequate protection and does not impose an unacceptable disadvantage to the defendant." — Per Goh Yihan JC, Para 5

"The plaintiffs emphasise, among others, that the Undertaking is an irrevocable and unconditional promise by OB and OBS that is akin to a bank guarantee." — Per Goh Yihan JC, Para 5

The defendant took the opposite position and argued that the plaintiffs should provide security by way of a solicitor’s undertaking from the plaintiffs’ lawyers. The defendant’s case was that the undertaking from OB and OBS was plainly inadequate. The defendant also stressed the practical difficulty of enforcement, contending that if the undertaking had to be enforced, the defendant would be put to the time and cost of ascertaining whether OB had assets in Singapore or of undertaking enforcement action overseas. That concern went directly to the adequacy inquiry because it suggested the proposed security might not be readily enforceable in a simple and straightforward manner. (Para 6) (Para 28)

"The defendant’s position is that the plaintiffs should provide security by way of a solicitor’s undertaking from the plaintiffs’ lawyers. The defendant argues that the Undertaking is plainly inadequate." — Per Goh Yihan JC, Para 6

"Thus, in the event that the Undertaking needs to be enforced, the defendant would be put to the time and cost of ascertaining whether OB has assets in Singapore or undertaking enforcement action overseas." — Per Goh Yihan JC, Para 6

The judge’s task was therefore to decide whether the plaintiffs had discharged their burden of showing that the undertaking was adequate. That required the court to examine not only the legal character of the undertaking, but also the financial position of OB and OBS, the terms of the undertaking, and the practical realities of enforcement. The court’s reasoning was fact-sensitive and commercial, rather than formalistic. (Para 12) (Para 40) (Para 42) (Para 44) (Para 49)

Why Did the Court Say There Is No Fixed Form of Security for Costs?

The court rejected the notion that security for costs must take one of a limited set of conventional forms. The judge observed that Order 23 rule 2 confers a wide discretion and does not prescribe a particular form of security. That meant the court could accept a non-traditional form if it was adequate. The judge’s approach was consistent with the broader principle that the purpose of security is protection, not ritual adherence to a preferred instrument. (Para 10) (Para 12)

"O 23 r 2 does not prescribe a particular form of security. … The court therefore has a wide discretion under O 23 r 2 to order security in any form that it deems fit." — Per Goh Yihan JC, Para 10

To support that conclusion, the judge surveyed foreign authorities and extracted the common theme that the plaintiff should ordinarily be allowed to propose the least disadvantageous form of security, provided the defendant is adequately protected. The judgment referred to authorities such as Rosengrens, Yara Australia, and DIF III Global Co-Investment Fund, LP, among others, as illustrating that the form of security is not fixed and that adequacy is the key criterion. The judge also noted that some authorities had accepted non-conventional forms, including deeds of indemnity and undertakings from funders, where the facts justified them. (Para 13) (Para 14) (Para 15) (Para 16) (Para 17) (Para 18) (Para 19) (Para 20) (Para 21) (Para 22) (Para 23) (Para 24) (Para 25) (Para 26) (Para 27)

The judge was careful, however, not to convert those authorities into a rigid rule. Instead, he treated them as illustrations of a broader principle: the court’s concern is whether the security is adequate and enforceable, not whether it conforms to a conventional template. That is why the judgment repeatedly returns to the practical question of whether the defendant can “readily enforce” an order for costs if necessary. (Para 28) (Para 40) (Para 49)

"the core consideration is whether the security is adequate, in the sense of being enforceable in a simple and straightforward manner, such that the defendant can recover the costs of the action if he succeeds." — Per Goh Yihan JC, Para 28

How Did the Court Evaluate the Adequacy of the Undertaking on the Facts?

The court found that the undertaking was adequate because it provided a fund or asset against which the defendant could readily enforce an order for costs if necessary. That conclusion was grounded in the financial strength of OB and OBS and in the terms of the undertaking itself. The judge expressly stated that the undertaking was an adequate form of security for costs. (Para 40) (Para 49)

"In my judgment, the Undertaking is an adequate form of security for costs, in that it provides a fund or asset against which the defendant can readily enforce an order for costs if necessary." — Per Goh Yihan JC, Para 40

The court relied on evidence showing that OBS’s audited accounts for financial year 2022 reflected net assets of about S$2.2 million and profit before tax of about S$533,739. The court also noted that OB, a publicly listed company, had substantial net assets of about S$605 million, with cash and cash equivalents of about S$101 million, according to its latest financial statements for the financial year ended 31 December 2022. Those figures were important because they demonstrated that the undertaking was not an empty promise; it was backed by entities with substantial financial resources. (Para 42)

"It is clear from OBS’s audited accounts for financial year 2022 that it has net assets of about S$2.2m and profit before tax of about S$533,739." — Per Goh Yihan JC, Para 42

"As for OB, which is a publicly listed company, its latest financial statements from the financial year that had ended on 31 December 2022 record that it has substantial net assets of about S$605m, with cash and cash equivalents of about S$101m." — Per Goh Yihan JC, Para 42

The judge also considered the amended clause (c) in the letter dated 6 April 2023. Although the extraction does not reproduce the full text of that clause, the court treated the amendment as part of the package of evidence showing that the undertaking had been refined to address enforceability concerns. The judge’s analysis suggests that the terms of the undertaking were sufficiently concrete to support enforcement, rather than leaving the defendant with an uncertain or speculative remedy. (Para 45)

"the amended clause (c) in their letter dated 6 April 2023" — Per Goh Yihan JC, Para 45

On that basis, the court concluded that the undertaking was not merely theoretically available but practically useful. The judge’s reasoning was that the existence of substantial assets, together with the enforceable promise embodied in the undertaking, meant the defendant would have a real source of recovery if it succeeded on costs. That is the essence of adequacy under the court’s formulation. (Para 40) (Para 49)

Why Did the Court Reject the Defendant’s Objection About Enforcement Difficulty?

The defendant argued that enforcement of the undertaking would be cumbersome because it might require tracing assets in Singapore or pursuing enforcement overseas. The court did not accept that this possibility rendered the undertaking inadequate. Instead, the judge focused on whether the undertaking, viewed in light of the evidence, provided a fund or asset against which the defendant could readily enforce an order for costs. The existence of substantial assets in OB and OBS meant that the defendant was not left with a speculative or illusory remedy. (Para 6) (Para 42) (Para 49)

"there would be little or no risk of satellite litigation surrounding the enforcement of the Undertaking." — Per Goh Yihan JC, Para 44

The court’s treatment of satellite litigation was especially important. The judge accepted that one concern with non-traditional security is that it may generate disputes about enforcement, but found that concern minimal on the facts. Because the undertaking was backed by identifiable and substantial assets, the judge considered that there would be little or no risk of satellite litigation surrounding enforcement. That finding directly answered the defendant’s practical objection. (Para 44)

In other words, the court did not require the security to be the most convenient imaginable form; it required it to be adequate. The judge’s analysis shows that inconvenience alone is not enough to defeat a proposed form of security if the defendant is still protected in substance. The decisive question remained whether the security was enforceable in a simple and straightforward manner, and the court answered that question in the affirmative. (Para 28) (Para 40) (Para 44) (Para 49)

How Did the Court Use the Foreign Authorities on Non-Traditional Security?

The judgment contains a substantial comparative discussion of foreign authorities. The judge referred to cases such as PT Bumi International Tankers, DIF III Global Co-Investment Fund, Rosengrens, Yara Australia, Versloot Dredging, Re Tiaro Coal, Infinity Distribution, Pioneer Energy, Nylex, Mohammad Ali Aoun, Trailer Trash Franchise Systems, AP (UK), Iddles, Global Finance Group, and Northern Southern Western Supermarkets. These authorities were used to illustrate the range of approaches taken elsewhere and to identify the common thread that adequacy, not formality, is the governing concern. (Para 13) (Para 14) (Para 15) (Para 16) (Para 17) (Para 18) (Para 19) (Para 20) (Para 21) (Para 22) (Para 23) (Para 24) (Para 25) (Para 26) (Para 27)

"the plaintiff should be allowed to propose the least disadvantageous form of security, provided that the opposite party is adequately protected." — Per Goh Yihan JC, Para 13

Among those authorities, the judge drew support from the proposition that a plaintiff should ordinarily be allowed to propose the least disadvantageous form of security, so long as the defendant is adequately protected. The judge also noted authority for the proposition that the form of a fund or asset is immaterial if it is adequate, and that non-traditional security may be accepted where it is enforceable simply and straightforwardly. These authorities helped the court resist any default preference for a bank guarantee or solicitor’s undertaking. (Para 13) (Para 14) (Para 15) (Para 16) (Para 17) (Para 18) (Para 19) (Para 20) (Para 21) (Para 22) (Para 23) (Para 24) (Para 25) (Para 26) (Para 27)

At the same time, the judge did not treat the foreign cases as mechanically controlling. Some were distinguished on their facts, and others were considered but not followed as a basis for a Singapore rule. The judgment therefore uses comparative law as persuasive support, not as a substitute for the court’s own construction of Order 23 rule 2 and its own assessment of adequacy on the facts before it. (Para 19) (Para 20) (Para 21) (Para 22) (Para 23) (Para 24) (Para 25) (Para 26) (Para 27)

What Was the Significance of the Plaintiffs’ Litigation Funders’ Financial Position?

The financial position of OB and OBS was central to the court’s conclusion that the undertaking was adequate. The judge relied on OBS’s audited accounts and OB’s latest financial statements to show that both entities had substantial assets. This mattered because the adequacy of an undertaking depends not merely on its wording, but on whether the promisor has the means to honour it. The court was satisfied that the undertaking was backed by real financial substance. (Para 42) (Para 49)

"It is clear from OBS’s audited accounts for financial year 2022 that it has net assets of about S$2.2m and profit before tax of about S$533,739." — Per Goh Yihan JC, Para 42

"As for OB, which is a publicly listed company, its latest financial statements from the financial year that had ended on 31 December 2022 record that it has substantial net assets of about S$605m, with cash and cash equivalents of about S$101m." — Per Goh Yihan JC, Para 42

Those figures were not used to assess damages or liability; they were used to assess the reliability of the proposed security. The judge’s reasoning was that a defendant need not be left to speculate whether a funder can pay if the funder’s financial statements show substantial net assets and liquidity. That evidence supported the conclusion that the undertaking provided a fund or asset against which the defendant could readily enforce an order for costs. (Para 40) (Para 42) (Para 49)

The court’s approach also shows that the adequacy inquiry is practical and evidence-based. A proposed undertaking from a funder will not be accepted merely because it is labelled “irrevocable” or “unconditional”; the court will look at the promisor’s financial capacity and the enforceability of the promise. Here, the evidence satisfied the court that the undertaking was commercially meaningful. (Para 5) (Para 42) (Para 49)

What Order Did the Court Ultimately Make?

The court allowed the appeal and ordered that the plaintiffs furnish security for the defendant’s costs for the period until the filing and/or exchange of affidavits of evidence-in-chief by way of an undertaking to the court jointly by OB and OBS. That was the operative order replacing the more conditional hierarchy that had been set out below. The judge’s order thus accepted the plaintiffs’ proposed form of security. (Para 3) (Para 50)

"I allow the plaintiffs’ appeal." — Per Goh Yihan JC, Para 3

"I order that the plaintiffs furnish security for the defendant’s costs for the period until the filing and/or exchange of affidavits of evidence-in-chief by way of an undertaking to the court jointly by OB and OBS" — Per Goh Yihan JC, Para 50

The court also addressed costs of the appeal. Rather than fixing costs immediately, the judge directed the parties to attempt to agree on an appropriate costs order. If they could not agree, they were to tender written submissions of no more than five pages each within 14 days. That procedural direction left the issue of costs open pending further submissions or agreement. (Para 51)

"Unless the parties are able to agree on an appropriate costs order for the present appeal, they are to tender written submissions, no longer than 5 pages each, within 14 days of this judgment." — Per Goh Yihan JC, Para 51

Why Does This Case Matter?

This case matters because it gives a clear Singapore articulation of the principles governing the form of security for costs. The court held that there is no fixed form of security and that adequacy is the decisive question. That is practically important for litigants, especially in cases involving litigation funders or other non-traditional sources of security, because it confirms that the court will look to substance rather than labels. (Para 10) (Para 12) (Para 28)

The case also matters because it shows that a litigation funder’s undertaking can be accepted as security where the evidence demonstrates real financial backing and practical enforceability. The court did not require a bank guarantee or solicitor’s undertaking as a matter of principle. Instead, it accepted a tailored commercial undertaking backed by substantial assets. That gives future litigants a framework for proposing alternative forms of security, provided they can prove adequacy. (Para 40) (Para 42) (Para 44) (Para 49)

Finally, the judgment is significant because it reduces uncertainty in a procedural area where parties often fight over form rather than substance. By stating that the plaintiff is not restricted to any fixed form and must show adequacy, the court provides a workable test for future disputes. The decision also signals that concerns about enforcement and satellite litigation will be assessed concretely, not assumed abstractly. (Para 12) (Para 28) (Para 44) (Para 49)

Cases Referred To

Legislation Referenced

• Rules of Court 2014, Order 23 rule 1(1) (Para 9)
• Rules of Court 2014, Order 23 rule 2 (Para 10)
• Rules of Court 2021, Order 9 rule 12 (Para 8)

Source Documents

• Original Judgment — Singapore Courts
• Archived Copy (PDF) — Litt Law CDN

This article analyses [2023] SGHC 113 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.