Case Details
- Title: Hyflux Ltd (in compulsory liquidation) and others v Lum Ooi Lin
- Citation: [2023] SGHC 113
- Court: High Court of the Republic of Singapore (General Division)
- Suit No: Suit No 267 of 2022
- Registrar’s Appeal No: Registrar’s Appeal No 42 of 2023
- Date of Decision: 28 April 2023
- Judge: Goh Yihan JC
- Hearing Date: 5 April 2023 (Judgment reserved)
- Plaintiffs/Applicants: Hyflux Ltd (in compulsory liquidation) and 37 other entities (including Hydrochem (S) Pte Ltd, Bendemeer Infrastructure Pte Ltd, Eflux Singapore Pte Ltd, and various Hyflux group companies and related parties)
- Defendant/Respondent: Lum Ooi Lin
- Legal Area: Civil Procedure — Costs
- Issue Type: Security for costs — form and adequacy of security
- Statutes Referenced: Civil Procedure Act 2010 (via Civil Procedure Act 2010 framework and the Rules of Court)
- Rules of Court Referenced: Order 23 r 2 of the Rules of Court (2014 Rev Ed) (“ROC 2014”); and related principles under Order 9 r 12 of the Rules of Court 2021 (“ROC 2021”)
- Key Procedural Context: Appeal against Senior Assistant Registrar’s order on the form of security for the defendant’s costs
- Quantum of Security (agreed): S$90,000
- Security Forms in Dispute: (i) undertaking jointly by litigation funders Omni Bridgeway Limited and Omni Bridgeway (Singapore) Pte Ltd; versus (ii) solicitor’s undertaking; with fallback options including banker’s guarantee and payment into court
- Length of Judgment: 26 pages; 7,845 words
Summary
In Hyflux Ltd (in compulsory liquidation) and others v Lum Ooi Lin [2023] SGHC 113, the High Court (Goh Yihan JC) allowed the plaintiffs’ appeal against a Registrar’s order requiring them to furnish security for the defendant’s costs. The central dispute was not whether security should be provided, but the form of security: the plaintiffs sought to provide security by way of an undertaking jointly given by their litigation funders, while the defendant argued that the undertaking was inadequate and that security should instead be provided by a solicitor’s undertaking.
The court held that Order 23 r 2 of the Rules of Court 2014 confers a wide discretion on the court to direct the manner, time, and terms of security for costs, and that the discretion must be exercised according to clear principles. In the absence of Singapore authority on the specific principles for selecting the appropriate form, the judge adopted and applied a structured approach derived from comparative jurisprudence, emphasising (i) the plaintiff’s entitlement to propose a form least disadvantageous to it, (ii) the plaintiff’s practical burden to show adequacy and absence of unacceptable disadvantage, and (iii) the protective object of security for costs—ensuring a readily enforceable fund or asset for a successful defendant’s costs.
What Were the Facts of This Case?
The plaintiffs were a large group of entities associated with Hyflux and related businesses, with some in compulsory liquidation and others in creditors’ voluntary liquidation, as well as certain entities under receivership. They commenced proceedings against the defendant, Lum Ooi Lin. As is common in litigation involving parties that may face difficulties in meeting costs awards, the defendant applied for security for costs.
At the stage of the Registrar’s decision, the parties reached agreement on the quantum of security: S$90,000. The disagreement concerned only the form of security. The Senior Assistant Registrar ordered that the plaintiffs furnish security for the defendant’s costs for the relevant period (until the filing and/or exchange of affidavits of evidence-in-chief) through a stepped set of alternatives. These included: (a) a jointly given costs undertaking by Omni Bridgeway Limited and Omni Bridgeway (Singapore) Pte Ltd on terms satisfactory to the defendant; (b) if not, a banker’s guarantee; (c) if not, a solicitor’s undertaking; and (d) if the parties could not agree on terms, payment into court.
The plaintiffs appealed because, in substance, the Registrar’s order effectively left the eventual form of security to the defendant’s preferences, rather than confining the security to the plaintiffs’ proposed undertaking. The plaintiffs had also refined the undertaking by a letter dated 6 April 2023, and the High Court considered the undertaking in its refined form.
In the High Court, the plaintiffs’ position was that the undertaking by their litigation funders was adequate and should be the sole form of security. They argued that the undertaking was an irrevocable and unconditional promise, comparable in practical effect to a bank guarantee. They further contended that the funders had the means to pay and would likely satisfy any costs liability without the need for enforcement, and that enforcement against them could be obtained readily if required.
What Were the Key Legal Issues?
The key legal issue was whether the High Court should allow the plaintiffs’ proposed form of security—an undertaking jointly given by the litigation funders—without requiring the defendant’s preferred fallback forms (such as a solicitor’s undertaking, banker’s guarantee, or payment into court). Put differently, the question was whether the undertaking was an adequate form of security for costs for the agreed quantum and for the relevant period.
A related issue concerned the governing legal framework for determining the form of security under Singapore civil procedure. Order 23 r 2 of the Rules of Court 2014 provides that security shall be given in such manner, at such time, and on such terms as the court may direct, but it does not prescribe a specific form. The court therefore had to articulate and apply principles to guide the exercise of discretion in selecting the appropriate form of security.
Finally, the court had to address the defendant’s argument that the undertaking was inadequate because the plaintiffs did not specify whether the Singapore entity (OBS) had assets and where those assets were located. The defendant contended that the undertaking effectively depended on the foreign funder (OB), which would impose additional time and cost on enforcement, potentially exceeding the agreed S$90,000 security.
How Did the Court Analyse the Issues?
The court began by reiterating the “trite law” that the court has a discretionary power to order security for costs at any stage of proceedings. The purpose of such an order is to enable the defendant to recover costs from the plaintiff out of a fund within the jurisdiction if the plaintiff’s claim fails. The rationale is asymmetrical: while a plaintiff chooses whether to sue and therefore assumes the risk of suing a party who may not be good for costs, a defendant cannot choose whether to be sued. The law therefore treats defendants more favourably in this respect.
Turning to the sources of law, the judge identified Order 23 of the ROC 2014 as the principal provision relied upon by the parties, and also noted that Order 9 r 12 of the ROC 2021 is materially the same in substance. The judge observed that the Civil Justice Commission’s and Civil Justice Review Committee’s reports underpinning ROC 2021 did not suggest that the relevant principles should differ. This supported the view that the same conceptual approach should apply when deciding security for costs under the newer procedural regime.
With the parties agreeing that security should be provided (and agreeing on quantum), the dispute narrowed to the form of security. The court therefore focused on Order 23 r 2, which provides that where an order is made requiring security for costs, the security shall be given in such manner, at such time, and on such terms as the court may direct. The judge emphasised that this provision does not prescribe a particular form. Traditional forms include banker’s guarantees, solicitors’ undertakings, and payment into court, but the court’s discretion is not limited to those categories.
However, the court stressed that discretion must be exercised according to clear principles. Because there was no Singapore decision laying down the applicable principles for determining the form of security, the judge adopted an analytical framework from DIF III Global Co-Investment Fund, LP v BBLP LLC [2016] VSC 401 (Hargrave J), which had analysed English and Australian authorities. The principles, as summarised by the judge, were: (a) the plaintiff is entitled to propose security in a form least disadvantageous to it; (b) the plaintiff bears a “practical onus” of establishing that the proposed security is adequate and does not impose an “unacceptable disadvantage” on the defendant; (c) adequacy requires that the proposed security satisfy the protective object of a security for costs order—providing a fund or asset against which a successful defendant can readily enforce a costs order; and (d) the court will determine how justice is best served in the particular circumstances, based on these and any other relevant considerations.
Applying these principles, the judge rejected the defendant’s attempt to cast doubt on the correctness of the comparative framework. While the defendant argued that the principles were not necessarily appropriate, the judge considered them an accurate summary of the broader case law logic. The court then applied the principles to the facts: the plaintiffs proposed an undertaking by OB and OBS, and the defendant challenged adequacy on enforceability and practicality grounds.
The court’s analysis turned on whether the undertaking provided a readily enforceable basis for a successful defendant to recover costs, and whether any practical disadvantage to the defendant was “unacceptable” in the context of the agreed quantum. The judge accepted that the undertaking was an irrevocable and unconditional promise. The court also considered the practical realities: the funders were entities with the means to pay, and the undertaking was structured to operate in a manner akin to a bank guarantee. This reduced the likelihood that the defendant would need to incur significant enforcement costs.
On the defendant’s concern about OBS’s assets and the location of those assets, the judge treated the argument as insufficient to render the undertaking inadequate in the circumstances. The court did not require the plaintiffs to provide a level of asset disclosure that would effectively convert the security-for-costs inquiry into a detailed solvency investigation. Instead, the court focused on the protective object of the order and the practical enforceability of the undertaking. The judge also considered that enforcement against the funders could be readily obtained if necessary, and that any enforcement-related friction would not necessarily exceed the agreed security quantum in a way that would amount to an unacceptable disadvantage.
Crucially, the court also addressed the procedural concern that the Registrar’s stepped order effectively vested the eventual form of security in the defendant’s wishes. The High Court’s approach was to ensure that the plaintiffs’ proposed form—if adequate—should not be displaced merely because the defendant preferred a different instrument. The court therefore treated the undertaking as the appropriate form of security for the relevant period, rather than leaving the matter open-ended.
What Was the Outcome?
The High Court allowed the plaintiffs’ appeal. It 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 Omni Bridgeway Limited and Omni Bridgeway (Singapore) Pte Ltd (the “Undertaking”), as refined by the plaintiffs’ letter dated 6 April 2023.
Practically, this meant that the defendant would not be able to insist on alternative forms of security (such as a solicitor’s undertaking, banker’s guarantee, or payment into court) so long as the plaintiffs complied with the ordered Undertaking. The decision therefore provides guidance on when a litigation funder undertaking can satisfy the protective function of security for costs.
Why Does This Case Matter?
This decision is significant for Singapore civil procedure because it clarifies the approach to selecting the form of security for costs under Order 23 r 2. While security for costs is a familiar procedural tool, disputes often arise over whether a proposed instrument is sufficiently protective and enforceable. The court’s adoption of a structured set of principles—particularly the “practical onus” and the focus on the protective object—offers practitioners a clear framework for arguing adequacy.
For plaintiffs, the case supports the proposition that they may propose a security form that is least disadvantageous to them, including undertakings given by litigation funders, provided they can show that the proposed security will allow a successful defendant to enforce a costs order readily. For defendants, the case confirms that enforceability and practical disadvantage remain relevant, but that objections must be grounded in the protective purpose of the order rather than in speculative concerns about enforcement logistics.
For lawyers advising on litigation funding arrangements, the decision is especially relevant. It indicates that a properly drafted, irrevocable and unconditional funder undertaking can be treated as adequate security, even where the undertaking is given by entities with cross-border elements. However, the decision also implies that plaintiffs should be prepared to demonstrate the practical enforceability of the undertaking and to address concerns about the availability of assets or enforcement pathways, at least at a level sufficient to satisfy the court’s “practical onus”.
Legislation Referenced
- Civil Procedure Act 2010
- Rules of Court (2014 Rev Ed), Order 23 r 2
- Rules of Court 2021, Order 9 r 12 (noted as materially similar in substance)
Cases Cited
- Hyflux Ltd (in compulsory liquidation) and others v Lum Ooi Lin [2023] SGHC 113
- PT Bumi International Tankers v Man B&W Diesel S E Asia Pte Ltd and another [2004] 3 SLR(R) 69
- DIF III Global Co-Investment Fund, LP v BBLP LLC [2016] VSC 401
Source Documents
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.