SK LATERAL RUBBER & PLASTIC TECHNOLOGIES (SUZHOU) CO., LTD v LATERAL SOLUTIONS PTE LTD

"In my opinion, having regard to all the circumstances it would not be just to order security for costs." — Per Roger Giles IJ, Para 52

Case Information

• Citation: [2020] SGHC(I) 09 (Para 0)
• Court: Singapore International Commercial Court (Para 0)
• Date of hearing / judgment: 30 March 2020; 17 April 2020 (Para 0)
• Coram: Roger Giles IJ (Para 0)
• Counsel for the plaintiff: Jimmy Yim, SC, Kevin Lee, Eunice Lau and Ho Wah Jiang (Drew & Napier LLC) (Para 54)
• Counsel for the defendant: Tan Chuan Thye, SC, Disa Sim, Jared Kok, Chiang Yuan Bo and James Kwong (Rajah & Tann Singapore LLP) (Para 54)
• Case number: Suit No 6 of 2019 (Summons No 13 of 2020) (Para 0)
• Area of law: Civil Procedure – Costs – Security (Para 0)
• Judgment length: The extracted material does not provide a page count or word count, so the judgment length is not stated in the extraction and is therefore not answerable from the provided text.

Summary

This was an application by Lateral Solutions Pte Ltd, the defendant and counterclaimant, for security for costs against SK Lateral Rubber & Plastic Technologies (Suzhou) Co., Ltd, the plaintiff and counterdefendant. The court accepted that SKL was ordinarily resident out of the jurisdiction, but held that the discretion to order security should not be exercised on the facts before it. The judge rejected the impecuniosity basis, gave only limited weight to enforcement inconvenience in China, and treated the overlap between the claim and counterclaim as a factor against security. (Para 1) (Para 16) (Para 27) (Para 33) (Para 51)

The dispute arose out of a 2011 manufacturing and supply arrangement under which SKL made parts for Lateral, which Lateral would supply to Apple and perhaps others. The relationship later deteriorated and ended in acrimony in 2017, after which SKL claimed USD 10.3 million and Lateral advanced a counterclaim. The proceedings began in the High Court in October 2017 and were transferred to the SICC in December 2019, with the present security application heard in March 2020 and judgment reserved and then delivered in April 2020. (Para 3) (Para 4) (Para 8) (Para 11) (Para 0)

The court’s reasoning proceeded in three broad stages. First, it held that the statutory condition for impecuniosity under s 388 of the Companies Act was not made out because the evidence did not amount to credible testimony that SKL would be unable to pay costs if ordered. Second, it accepted that SKL’s ordinary residence in China and the practicalities of enforcing a Singapore costs order there remained relevant, but the Memorandum of Guidance on recognition and enforcement in China reduced the weight of that factor. Third, it assessed the overall justice of ordering security, including the relative strength of the claim and the overlap with the counterclaim, and concluded that security should not be ordered. (Para 19) (Para 26) (Para 32) (Para 33) (Para 37) (Para 51) (Para 52)

How did the court describe the commercial relationship and the breakdown that led to the dispute?

The court described the commercial relationship as one that began in 2011, when SKL and Lateral entered into an agreement under which SKL was to manufacture and supply parts for Lateral, and Lateral would in turn supply those parts to Apple and perhaps others. The judgment then noted that business continued for some years, but the relationship deteriorated and ended in acrimony in 2017. Those facts mattered because the security application was not being decided in the abstract: it arose in a live commercial dispute in which both sides had pleaded substantial monetary claims arising from the same long-running relationship. (Para 3)

"In 2011, SKL and Lateral entered into an agreement (“the Agreement”) under which SKL was to manufacture and supply parts for Lateral, which Lateral would in turn supply to Apple and perhaps others." — Per Roger Giles IJ, Para 3

The court also recorded the scale of SKL’s claim. SKL claimed USD 10.3 million from Lateral, and the claim was said to cover parts supplied as well as tooling procured, equipment purchased, and expenses incurred for the manufacture of parts. That factual context was relevant to the later analysis of the strength of the claim and the overlap with the counterclaim, because the judge had to decide whether the claim was sufficiently substantial and whether the parties’ respective claims were so intertwined that security would be inappropriate. (Para 4) (Para 37) (Para 46)

"SKL claims USD 10.3 million from Lateral, for parts supplied and for tooling procured, equipment purchased and expenses incurred for the manufacture of parts." — Per Roger Giles IJ, Para 4

The court further noted that the proceedings were commenced in the High Court in October 2017 and later transferred to the SICC in December 2019. That procedural history mattered because the judge had to address the special security-for-costs regime applicable in the SICC, including the effect of transfer and the relationship between the SICC rules and the ordinary High Court rules. (Para 8) (Para 11) (Para 27) (Para 28)

"The proceedings were commenced in the High Court in October 2017." — Per Roger Giles IJ, Para 8

"In December 2019 the proceedings were transferred to the SICC." — Per Roger Giles IJ, Para 11

What was the procedural setting of the security application, and how did the parties frame it?

The application before the court was a summons by the defendant/counterclaimant seeking security for costs against the plaintiff/counterdefendant. The judge recorded that security was claimed on two bases: first, that SKL would be unable to pay Lateral’s costs if ordered to do so, described as the impecuniosity basis; and second, that SKL was ordinarily resident out of the jurisdiction, described as the foreign plaintiff basis. The court’s task was therefore not merely to decide whether one factual concern existed, but to determine whether either basis enlivened the power to order security and, if so, whether the discretion should be exercised in all the circumstances. (Para 16) (Para 27) (Para 29)

"Security for costs was claimed on two bases for the power to order it: in shorthand, later more fully described - (a) that SKL would be unable to pay Lateral’s costs if ordered to do so (“the impecuniosity basis”); and (b) that SKL is ordinarily resident out of the jurisdiction (“the foreign plaintiff basis”)." — Per Roger Giles IJ, Para 16

The judge also identified additional matters that the parties had put in issue, namely the strength of SKL’s claim, possible cash flow issues, and overlap between the claim and the counterclaim. Those subsidiary considerations were not treated as separate statutory gateways; rather, they were part of the overall discretionary assessment once the relevant basis for security was established or assumed. The judgment therefore moved from the threshold questions to a broader evaluative inquiry into justice and fairness in the circumstances of the case. (Para 34) (Para 29)

"Other factors to which the parties referred may be summarised as – (a) the strength of SKL’s claim; (b) possible cash flow issues; and (c) overlap between the claim and the counterclaim." — Per Roger Giles IJ, Para 34

That framing is important because the court did not treat security for costs as automatic merely because the plaintiff was foreign or because the defendant had concerns about recoverability. Instead, the judge approached the matter as a structured discretion governed by the applicable rules and authorities, with the ultimate question being whether, in all the circumstances, it would be just to order security. (Para 29) (Para 52)

"all the circumstances are considered to determine whether it is just that security should be ordered, without a presumption in favour of, or against, an order" — Per Roger Giles IJ, Para 29

Why did the court reject the impecuniosity basis for security?

The impecuniosity basis rested on s 388 of the Companies Act, which permits security where credible testimony shows reason to believe that a corporate plaintiff will be unable to pay the defendant’s costs if successful. The judge set out the statutory language and then examined the evidence relied on by Lateral. The central point was that the evidence did not satisfy the statutory threshold: there was no credible testimony establishing reason to believe that SKL would be unable to pay costs. (Para 19) (Para 26)

"Where a corporation is plaintiff in any action or other legal proceeding the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and stay all proceedings until the security is given." — Per Roger Giles IJ, Para 19

The judge expressly concluded that the requisite condition had not been made out. That conclusion was not reached by a broad impressionistic assessment alone; it followed from the court’s treatment of the payment history and the absence of reliable evidence showing inability to pay. The judge also rejected the suggestion that SKL’s conduct in relation to interlocutory costs payments demonstrated financial incapacity. (Para 23) (Para 26)

"The requisite condition for the impecuniosity basis has not been made out." — Per Roger Giles IJ, Para 26

In dealing with the payment history, the court noted that extensive correspondence had been produced and that Lateral’s submission was excessive. The judge stated that nothing adverse to SKL’s ability to pay costs as stated in s 388 was to be drawn from the course of payment of the interlocutory amounts. That finding was significant because it undercut the practical foundation of the impecuniosity argument: the mere fact that payments had been made in a manner Lateral regarded as unsatisfactory did not amount to evidence of inability to meet a future costs order. (Para 23) (Para 19) (Para 26)

"Copies of the extensive correspondence were provided. Lateral’s submission is excessive. In my view, nothing adverse to SKL’s ability to pay costs as stated in s 388 is to be drawn from the course of payment of the interlocutory amounts." — Per Roger Giles IJ, Para 23

The court also dealt with SKL’s own evidence and the suggestion that the company might face cash flow issues. The judge found that there was no evidence of how SKL would or might be affected in its supply chains, manufacturing capability, level of sales, or any other particular way. In other words, the asserted financial vulnerability was not supported by concrete evidence of inability to pay costs, and the court was not prepared to infer impecuniosity from generalised assertions. (Para 41) (Para 26)

"But there is no evidence of how SKL will or might be affected in its supply chains, manufacturing capability, level of sales, or any other particular way." — Per Roger Giles IJ, Para 41

How did the court treat SKL’s residence in China and the enforcement issue?

The foreign plaintiff basis was not disputed in the sense that the court accepted SKL was ordinarily resident out of the jurisdiction. The real question was what weight that factor should carry in the discretion. The judge explained that, in the SICC, the provision of security for costs is governed by O 110 r 45 of the Rules, and that the ordinary High Court rule in Order 23 does not apply in the same way. The court also noted the special transfer-case provision in O 110 r 45(2A), which meant that the exclusion of the foreign plaintiff condition did not apply to a transfer case unless the High Court ordered otherwise when ordering the transfer, which it had not. (Para 27) (Para 28)

"In the SICC, the provision of security for costs is governed by O 110 r 45 of the Rules." — Per Roger Giles IJ, Para 27

"Order 110 r 45(2A) of the Rules provides that the exclusion above mentioned does not apply to a transfer case unless the High Court orders otherwise when ordering the transfer, which it did not." — Per Roger Giles IJ, Para 28

The judge then explained the relationship between the SICC regime and the principles developed under Order 23. The court cited B2C2 Ltd v Quoine Pte Ltd for the proposition that a defendant should not lose entitlement to security by virtue of transfer and that, notionally, the foreign-plaintiff principles applicable under Order 23 are added where the plaintiff is ordinarily resident out of the jurisdiction. The court also cited Jurong Town Corp v Wishing Star Ltd for the proposition that all the circumstances are considered without any presumption for or against security. These authorities framed the discretion and prevented the foreign residence factor from being treated as determinative. (Para 28) (Para 29)

"As explained in B2C2 Ltd v Quoine Pte Ltd [2018] 5 SLR 105 (“B2C2”) at [28]-[30], since the plaintiff sued in the High Court where being ordinarily resident out of the jurisdiction is a condition for ordering security for costs, the defendant should not lose its entitlement to security by virtue of the transfer; so there should notionally be added to the conditions in O 110 r 45(1B) that where the plaintiff is ordinarily resident out of the jurisdiction, the principles applicable in the exercise of the discretion are those established under Order 23." — Per Roger Giles IJ, Para 28

On the practical enforcement question, the court accepted that the Memorandum of Guidance on recognition and enforcement in China was relevant. The judge observed that the Memorandum was signed in August 2018, was not binding, but detailed the principles and process by which Singapore money judgments in commercial cases, including costs judgments, may be recognised in China. The judge then concluded that the Memorandum remained a factor in favour of ordering security, but that it reduced the weight of the enforcement concern because it gave assistance to and confidence in the ability to enforce a Singapore judgment in China. (Para 32) (Para 33)

"The Memorandum was signed in August 2018. It is not a binding document, but it details the principles and process by which Singapore money judgments in commercial cases, including costs judgments, may be recognised in China." — Per Roger Giles IJ, Para 32

"This remains as a factor, although the Memorandum reduces its weight, in favour of ordering security." — Per Roger Giles IJ, Para 33

That treatment is important because it shows the court did not ignore the practical difficulty of enforcing a Singapore costs order in China. Rather, the judge accepted the factor but calibrated its significance in light of the Memorandum. The result was a nuanced assessment: foreign residence and enforcement inconvenience remained relevant, but they were not enough, by themselves, to justify security in the face of the other considerations that pointed the other way. (Para 32) (Para 33) (Para 52)

What did each side argue about the evidence, payment history, and cash flow?

Lateral’s position was that SKL’s payment of costs had been erratic and that this supported an inference of inability or unwillingness to meet future costs orders. The judgment records that, in submissions, it was said that SKL’s payment of costs had been “erratic to say the least.” Lateral also wrote to SKL on 27 February 2020 asserting that SKL had not disputed earlier assertions and that Lateral was entitled to further security for costs to the end of the trial. Those submissions were directed to both the statutory impecuniosity basis and the broader discretionary assessment. (Para 21) (Para 15)

"In submissions, it was said that SKL’s payment of costs had been ‘erratic to say the least’." — Per Roger Giles IJ, Para 21

"On 27 February 2020 Lateral wrote to SKL, saying that SKL had not disputed the earlier assertions and that it (Lateral) was entitled to further security for costs to the end of the trial." — Per Roger Giles IJ, Para 15

SKL responded on 2 March 2020 by declining to provide the security and asserting that the SICC approaches security for costs by foreign plaintiffs differently. SKL also pointed out that, since the suit was first commenced in October 2017, it had conducted its litigation properly at all times. That response was relevant because it directly contested the premise that there was any conduct-based reason to distrust SKL’s compliance with costs obligations. The court’s later reasoning accepted that the payment history did not justify adverse inferences against SKL’s ability to pay. (Para 15) (Para 23) (Para 26)

"SKL replied on 2 March 2020, declining to provide the security and saying: ‘As you know, the SICC approaches the issue of security for costs by foreign plaintiffs differently. Moreover, since SIC 6 was first commenced in October 2017, SKL has conducted its litigation properly at all times.’" — Per Roger Giles IJ, Para 15

The court’s treatment of the evidence was notably restrained. It did not accept that the correspondence and payment history established a real risk of non-payment. Nor did it accept that general references to possible cash flow issues, without evidence of concrete operational harm, could justify security. The judge’s approach shows that the court required evidence capable of supporting the statutory and discretionary conclusions, rather than mere suspicion or forensic dissatisfaction with the pace of payment. (Para 23) (Para 41) (Para 26)

How did the court assess the strength of SKL’s claim and the overlap with the counterclaim?

The court treated the strength of SKL’s claim as a relevant discretionary factor. After reviewing the pleadings and the parties’ positions, the judge concluded that SKL should be regarded as having the stronger case. That conclusion mattered because a stronger claim weighs against ordering security: if the plaintiff appears to have the better case, the court is less inclined to impose a financial barrier that might impede the prosecution of a claim with real merit. (Para 34) (Para 37)

"I consider that SKL should be regarded as having the stronger case. That is a factor against ordering security." — Per Roger Giles IJ, Para 37

The judge did not conduct a full merits trial, and the authorities cited in the judgment caution against detailed merits review unless the case is exceptionally clear. The court referred to cases such as Ong Jane Rebecca v Pricewaterhousecoopers, Amer Hoseen Mohammed Revai v Singapore Airlines, Tjong Very Sumitomo v Chan Sing En, and Sembawang Engineering Pte Ltd v Priser Asia Engineering Pte Ltd to illustrate the limited and contextual nature of the merits inquiry. The point was not to decide the substantive dispute, but to determine whether the claim was sufficiently plausible and substantial to count against security. (Para 35) (Para 36) (Para 37)

"The court should not conduct a detailed merits review unless a high probability is shown" — Per Roger Giles IJ, Para 35

The overlap between the claim and counterclaim was another important factor. SKL argued that the claim and counterclaim arose out of the same set of circumstances relating to the Agreement and the parties’ relationship and actions thereunder, and that both were “launched from the same platform.” The judge accepted that there was significant overlap and treated that overlap as a factor against ordering security for Lateral’s costs to the end of the trial. The reason is practical and equitable: where the same factual matrix underlies both sides’ claims, the defendant’s exposure to costs is not cleanly separable from the plaintiff’s own claim, and security may be less just. (Para 46) (Para 51)

"It said that the claim and the counterclaim arose out of the same set of circumstances relating to the Agreement and the parties’ relationship and actions thereunder; that both were ‘launched from the same platform’." — Per Roger Giles IJ, Para 46

"This is a factor against ordering security for Lateral’s costs to the end of the trial." — Per Roger Giles IJ, Para 51

The court’s treatment of overlap is especially significant because it shows that security for costs is not assessed in isolation from the structure of the litigation. Where a counterclaim is closely connected to the claim, the court may regard the litigation as a single commercial contest rather than as a one-sided risk of unrecoverable costs. That was one of the reasons the judge ultimately concluded that, even if some factors pointed toward security, the overall balance did not justify it. (Para 46) (Para 51) (Para 52)

What legal principles did the court apply to the discretion to order security for costs?

The court’s analysis was anchored in the proposition that, once the relevant basis for security is engaged, the question is whether it is just to order security in all the circumstances. The judge expressly stated that there is no presumption in favour of or against security. That principle is central to the decision because it prevents the discretion from being reduced to a mechanical checklist and requires the court to weigh the practical and forensic realities of the case. (Para 29)

"all the circumstances are considered to determine whether it is just that security should be ordered, without a presumption in favour of, or against, an order" — Per Roger Giles IJ, Para 29

The judge also drew on the authorities to explain that the foreign plaintiff factor in a transfer case should not be ignored merely because the case began in the High Court and was later transferred to the SICC. B2C2 was used to show that the defendant should not lose the entitlement to security by reason of transfer, while Jurong was used to confirm the broad discretionary framework. This meant that the court had to consider both the statutory and rule-based conditions and then decide whether the overall justice of the case supported security. (Para 28) (Para 29)

"since the plaintiff sued in the High Court where being ordinarily resident out of the jurisdiction is a condition for ordering security for costs, the defendant should not lose its entitlement to security by virtue of the transfer" — Per Roger Giles IJ, Para 28

The court’s reasoning also reflects a careful distinction between threshold conditions and discretionary factors. The impecuniosity basis required credible testimony showing reason to believe the corporation would be unable to pay costs, and that threshold was not met. The foreign plaintiff basis was available in principle, but its weight was moderated by the Memorandum of Guidance and by the broader circumstances, including the strength of the claim and the overlap with the counterclaim. The result was a holistic refusal of security rather than a ruling that foreign plaintiffs can never be ordered to provide it. (Para 19) (Para 26) (Para 32) (Para 37) (Para 51) (Para 52)

Why did the court conclude that it would not be just to order security in this case?

The final conclusion was the product of cumulative balancing. The judge had already rejected the impecuniosity basis, and although the foreign plaintiff factor remained in play, the Memorandum of Guidance reduced its weight. Against that, the court found that SKL had the stronger case and that the overlap between claim and counterclaim counted against security. When those considerations were weighed together, the judge concluded that it would not be just to order security for costs. (Para 26) (Para 33) (Para 37) (Para 51) (Para 52)

"In my opinion, having regard to all the circumstances it would not be just to order security for costs." — Per Roger Giles IJ, Para 52

The judge then made the formal order dismissing the application. That order was not merely procedural housekeeping; it reflected the court’s substantive assessment that the defendant had not shown a sufficient basis to require the plaintiff to put up security before the merits of the dispute could be tried. The court also awarded SKL its costs of the application, subject to agreement or written submissions if necessary. (Para 54)

"I therefore order that the application be dismissed." — Per Roger Giles IJ, Para 54

The costs order followed the same logic. Because SKL succeeded on the application, it was entitled to its costs. The judge invited the parties to agree on the amount, and failing agreement, to exchange and file short written submissions for decision on the papers. That procedural direction is consistent with the court’s efficient management of interlocutory disputes in commercial litigation. (Para 54)

"SKL is entitled to its costs of the application." — Per Roger Giles IJ, Para 54

What authorities did the court refer to, and how were they used?

The judgment referred to several authorities to support the framework for security for costs and the assessment of merits and overlap. B2C2 Ltd v Quoine Pte Ltd was used for the transfer-case principle and the notion that a defendant should not lose entitlement to security by reason of transfer. Jurong Town Corp v Wishing Star Ltd was used for the proposition that all the circumstances are considered without presumption. These authorities were not cited as abstract propositions only; they were integrated into the court’s explanation of how the SICC should approach a foreign plaintiff in a transferred case. (Para 28) (Para 29)

"all the circumstances are considered to determine whether it is just that security should be ordered, without a presumption in favour of, or against, an order: Jurong Town Corp v Wishing Star Ltd [2004] 2 SLR(R) 427 at [14] (“Jurong”)." — Per Roger Giles IJ, Para 29

The court also referred to Ong Jane Rebecca v Pricewaterhousecoopers, Amer Hoseen Mohammed Revai v Singapore Airlines, Tjong Very Sumitomo v Chan Sing En, and Sembawang Engineering Pte Ltd v Priser Asia Engineering Pte Ltd in the discussion of the strength of the claim and the limits of merits review. Those cases were used to show that the court may take a broad view of whether a claim appears bona fide or strong, but should not descend into a detailed trial of the merits at the interlocutory stage. (Para 35) (Para 36) (Para 37)

Finally, the court referred to Creative Elegance (M) Sdn Bhd v Puay Kim Seng and P T Muliakeramik Indahraya TBK v Nam Huat Tiling & Panelling Co Pte Ltd in the context of security amount and stifling considerations. Those authorities were part of the broader discussion of how security can be calibrated and when it may be inappropriate because it would stifle a claim. Although the present judgment did not order security at all, the references show the range of considerations the court had in mind when evaluating the justice of the application. (Para 35) (Para 36)

Why does this case matter for SICC security-for-costs applications?

This case matters because it demonstrates how the SICC handles security for costs in a transferred commercial case involving a foreign corporate plaintiff. The judgment confirms that foreign residence is relevant but not decisive, that impecuniosity must be proved by credible testimony rather than conjecture, and that enforcement practicality in China may be mitigated by the Memorandum of Guidance. For practitioners, the case is a reminder that the court will examine the whole litigation context, including the relative strength of the claim and the relationship between claim and counterclaim. (Para 19) (Para 23) (Para 32) (Para 33) (Para 37) (Para 51) (Para 52)

"The Memorandum is an important contribution to inter-State enforceability, matching other like memoranda, and gives assistance to and confidence in ability to enforce a Singapore judgment in China." — Per Roger Giles IJ, Para 33

The case also matters because it illustrates the SICC’s willingness to apply established Singapore principles while adapting them to the transnational setting. The court did not create a special rule for foreign plaintiffs in the SICC; instead, it integrated the transfer-case rule, the ordinary discretion under Order 23, and the practical realities of cross-border enforcement. That approach gives litigants a clearer sense of how security applications will be assessed in international commercial disputes. (Para 27) (Para 28) (Para 29)

More broadly, the decision shows that a defendant seeking security must do more than point to foreign residence or general concerns about payment. The applicant must either satisfy the statutory threshold for impecuniosity or persuade the court, on all the circumstances, that security is just. Where the plaintiff has a substantial claim, where the counterclaim overlaps significantly, and where enforcement concerns are softened by international guidance, the court may refuse security even though the plaintiff is foreign. (Para 26) (Para 37) (Para 46) (Para 51) (Para 52)

Cases Referred To

Legislation Referenced

• Companies Act (Cap 50, 2006 Rev Ed), s 388 (Para 19) [CDN] [SSO]
• Rules of Court, Order 23 r 1(1) (Para 27) [CDN] [SSO]
• Rules of Court, Order 110 r 45(1A) (Para 27) [CDN] [SSO]
• Rules of Court, Order 110 r 45(1B) (Para 27) [CDN] [SSO]
• Rules of Court, Order 110 r 45(2) (Para 27) [CDN] [SSO]
• Rules of Court, Order 110 r 45(2A) (Para 28) [CDN] [SSO]

Source Documents

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

This article analyses [2020] SGHCI 9 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.