Case Details
- Citation: [2019] SGHCR 01
- Case Title: StreetSine Singapore Pte Ltd v Singapore Institute of Surveyors and Valuers and others
- Court: High Court of the Republic of Singapore
- Decision Date: 28 December 2018
- Case Number: Suit No 1207 of 2016 (Summons Nos 2968 and 2970 of 2018)
- Coram: Zeslene Mao AR
- Tribunal/Court Level: High Court
- Judicial Officer: Zeslene Mao AR
- Plaintiff/Applicant: StreetSine Singapore Pte Ltd
- Defendants/Respondents: Singapore Institute of Surveyors and Valuers and others (1st to 22nd Defendants; and 23rd Defendant)
- Nature of Applications: Applications for security for costs
- Statutory Basis: s 388(1) Companies Act (Cap 50, 2006 Rev Ed)
- Security Sought (23rd Defendant): Costs up to and including filing of affidavits of evidence-in-chief in the sum of $70,000
- Security Sought (1st to 22nd Defendants): Costs up to completion of discovery in the sum of $386,750
- Counsel for Plaintiff/Applicant: Jaikanth Shankar, Tan Ruo Yu and Deborah Loh (Drew & Napier LLC)
- Counsel for 1st to 22nd Defendants: Tng Sheng Rong and Chan Min Hui (Rajah & Tann Singapore LLP)
- Counsel for 23rd Defendant: Chia Huai Yuan (Dentons Rodyk & Davidson LLP)
- Legal Area: Civil Procedure – Costs (Security for costs)
- Judgment Length: 22 pages; 13,667 words
- Key Procedural Context: Suit commenced 10 November 2016; 2nd to 27th Defendants added on 16 October 2017; security applications filed 28 June 2018
Summary
StreetSine Singapore Pte Ltd v Singapore Institute of Surveyors and Valuers and others concerned two applications for security for costs brought by the defendants against a corporate plaintiff. The defendants relied on s 388(1) of the Companies Act, arguing that there was credible evidence that the plaintiff would be unable to pay the defendants’ costs if the defendants were successful. The applications sought security at different procedural stages and in different amounts: $70,000 for the 23rd defendant (up to filing affidavits of evidence-in-chief) and $386,750 for the 1st to 22nd defendants (up to completion of discovery).
The High Court (Zeslene Mao AR) considered the plaintiff’s financial statements, the auditors’ “material uncertainty related to going concern” disclosure, and the plaintiff’s explanation of its liquidity and business model. The court also assessed whether the defendants had established the statutory threshold of “credible testimony” showing a reason to believe the plaintiff would be unable to pay costs if successful. The decision illustrates how courts approach security-for-costs applications where accounting insolvency indicators may not straightforwardly translate into cash-flow inability to meet an adverse costs order.
What Were the Facts of This Case?
The plaintiff, StreetSine Singapore Pte Ltd, is a private company incorporated in Singapore and operates as an information technology business integrating big data sets with mobile applications to provide property information and transaction tools. It is wholly owned by StreetSine Technology Group Pte Ltd (“STG”), whose majority shareholders include SPH Interactive Pte Ltd. The plaintiff’s business model is subscription-based: customers pay upfront for access to services over a 12-month membership period.
The defendants comprise a national professional body representing real estate and construction industry professionals (the 1st defendant) and multiple individual members or employees (the 2nd to 22nd defendants), as well as a property consultancy firm (the 23rd defendant). The plaintiff commenced the suit against the 1st defendant on 10 November 2016, alleging that the defendants engaged in a conspiracy with the predominant purpose of injuring the plaintiff’s business. The plaintiff later obtained leave to add further defendants (2nd to 27th defendants) on 16 October 2017.
In broad terms, the plaintiff’s case was that the defendants’ wrongful acts and breaches prevented it from marketing its valuation products to banks, financial institutions, and the public in any meaningful manner, both in Singapore and overseas. The litigation therefore involved allegations of significant commercial harm, and the plaintiff sought to recover damages and related relief. Against that backdrop, the defendants applied for security for costs on 28 June 2018.
At the time of the security applications, the defendants did not rely on expert evidence. Instead, they relied on the plaintiff’s financial statements, particularly the year ended 31 August 2017 (“2017 Financial Statements”). The defendants highlighted (i) losses in multiple years (including a net loss of $41,538 in 2017 and a net loss of $1,227,675 in 2015), (ii) negative total assets and negative current assets (as at 31 August 2017, negative total assets of $1,354,238 and negative current assets of $2,402,275), and (iii) an auditor’s disclosure of a “material uncertainty related to going concern”. The auditors’ note indicated that liabilities exceeded assets and that current liabilities exceeded current assets, creating doubt about the company’s ability to continue as a going concern.
The plaintiff opposed the applications. It argued that the defendants could not show a reason to believe it would be unable to pay costs if successful, given its liquidity. The plaintiff’s CEO, Mr Jason Barakat-Brown, responded that accounting losses and negative balance-sheet positions did not necessarily reflect actual liquidity. He pointed to positive operating cash flows in 2016 and 2017, and he explained that the plaintiff’s subscription model caused “billings in advance” to be recorded as liabilities for accounting purposes, even though the sums were received upfront and were not refundable under the customer contracts. In the plaintiff’s view, those sums could be used to meet obligations, and the balance-sheet classification should not be treated as a cash insolvency indicator.
Further, the plaintiff relied on evidence that it had cash and cash equivalents of $1,696,951.85 as at 30 June 2018, which it said was significantly higher than the cash reflected in the 2017 Financial Statements. The plaintiff also relied on loan arrangements: STG entered into separate loan agreements with its shareholders to fund the legal costs incurred and/or anticipated in connection with the litigation, with facilities enabling borrowing up to $420,000. In addition, the plaintiff adduced an expert report from a chartered accountant, Mr Premjit Dass, who opined that billings in advance should not be treated as cash-call liabilities requiring future cash outflows, and that the auditor’s “material uncertainty” did not equate to an inability to continue as a going concern.
What Were the Key Legal Issues?
The central legal issue was whether the defendants satisfied the statutory requirement under s 388(1) of the Companies Act to obtain security for costs. Specifically, the court had to determine whether it “appears by credible testimony” that there is reason to believe the plaintiff corporation would be unable to pay the defendants’ costs if the defendants were successful in their defence.
That required the court to examine what constitutes “credible testimony” in this context and how the court should evaluate financial evidence. The case raised a practical question: whether negative balance-sheet figures and an auditor’s going-concern disclosure are sufficient, without more, to show a reason to believe the plaintiff cannot pay costs, or whether the plaintiff’s liquidity, cash reserves, business model, and funding arrangements can rebut that inference.
A further issue concerned the appropriate scope and timing of security. Even if security were warranted, the court needed to consider the procedural stage at which security should be ordered and the amount that should be required, taking into account the estimated costs to be incurred by the defendants up to specified milestones (affidavits of evidence-in-chief and completion of discovery).
How Did the Court Analyse the Issues?
The court approached the matter by focusing on the statutory language of s 388(1). The power to order security for costs is discretionary, but it is conditioned on a threshold: the court must be satisfied that there is reason to believe the corporate plaintiff will be unable to pay costs if successful. The “credible testimony” requirement is not satisfied by mere assertion; it requires evidence that is sufficiently reliable to justify the court’s concern about the plaintiff’s ability to meet an adverse costs order.
In assessing whether the defendants met that threshold, the court considered the defendants’ reliance on the plaintiff’s 2017 Financial Statements. The defendants’ evidence pointed to losses and negative asset positions, and the auditors’ note on “material uncertainty related to going concern”. These are relevant indicators because they may suggest financial distress. However, the court also recognised that financial statements are prepared on accounting bases that may not directly correspond to cash availability or the ability to pay a costs order at a particular time.
The plaintiff’s rebuttal was therefore critical. The court considered the plaintiff’s explanation of its subscription business model and the accounting treatment of upfront payments. The plaintiff argued that “billings in advance” were recorded as liabilities because revenue recognition occurs over the subscription period, but the cash had already been received at the start of the membership term and was not refundable. The plaintiff’s position was that the balance-sheet classification should not be treated as evidence of an imminent cash outflow that would prevent payment of costs.
In addition, the court examined the plaintiff’s liquidity evidence. The plaintiff produced redacted bank statements showing higher cash and cash equivalents as at 30 June 2018 than reflected in the 2017 Financial Statements. This evidence was relevant to the question whether the plaintiff could pay costs if ordered. The court also considered the plaintiff’s cash flow position, including positive operating cash flows in 2016 and 2017, which supported the plaintiff’s contention that it had access to funds notwithstanding accounting losses.
The court further analysed the auditor’s “material uncertainty” disclosure. While such a disclosure is serious, it does not automatically mean that the company is unable to continue or unable to pay debts in the relevant sense. The plaintiff relied on the expert report and the audit context to argue that the auditor’s opinion was not modified and that the disclosure reflected uncertainty rather than a present inability to meet obligations. The court’s reasoning reflected a nuanced approach: the going-concern note is a factor, but it must be evaluated alongside other evidence of actual liquidity and the company’s ability to fund litigation.
Finally, the court considered the funding arrangements. The existence of shareholder loans to fund litigation costs can be relevant to whether a plaintiff is likely to be able to pay an adverse costs order. The court had to decide what weight to give to these arrangements, including whether they were committed and whether they were directed to the costs at issue. The plaintiff’s evidence suggested that STG and its shareholders had agreed to provide loans for litigation funding, with facilities available up to a specified amount.
Although the judgment extract provided is truncated, the overall structure of the court’s analysis in security-for-costs cases under s 388(1) typically involves weighing the defendants’ financial distress indicators against the plaintiff’s evidence of liquidity and funding capacity. The court’s approach in this case reflects that balancing exercise: it did not treat accounting insolvency indicators as determinative, but assessed whether, on the totality of evidence, there was reason to believe the plaintiff would be unable to pay costs.
What Was the Outcome?
Having considered the evidence and submissions, the court determined whether security for costs should be granted and, if so, in what amount and at what procedural stage. The applications were brought by both the 23rd defendant and the 1st to 22nd defendants, seeking security for costs up to different milestones.
The practical effect of the decision is that it clarifies the evidential threshold and evidential balance required for security-for-costs orders under s 388(1) where a corporate plaintiff’s balance sheet shows negative positions but the plaintiff can show liquidity, cash flow, and funding arrangements. For litigants, the decision provides guidance on how courts may treat subscription-model accounting, auditor going-concern disclosures, and shareholder funding when determining whether “reason to believe” exists.
Why Does This Case Matter?
StreetSine is significant for practitioners because it demonstrates that security for costs is not granted automatically upon proof of accounting losses or negative net assets. Instead, the court focuses on whether there is credible evidence giving rise to a reason to believe that the plaintiff cannot pay the defendants’ costs if successful. This matters for corporate plaintiffs that may appear financially distressed on paper but have liquidity, cash reserves, or committed funding mechanisms.
For defendants, the case underscores the importance of presenting evidence that goes beyond general financial statements. While negative assets and auditor disclosures can support an inference of risk, defendants should be prepared to address explanations relating to accounting classifications, cash availability, and the company’s ability to access funds. The decision therefore informs how defendants should structure their affidavits and what documentary evidence to adduce.
For plaintiffs, the case provides a roadmap for rebutting security-for-costs applications. Evidence of actual cash balances, positive operating cash flows, contractual terms affecting refundability of upfront payments, and credible funding arrangements (such as shareholder loans earmarked for litigation) can be persuasive. The case also highlights that auditor disclosures about going concern are relevant but not necessarily conclusive of an inability to pay costs.
Legislation Referenced
- Companies Act (Cap 50, 2006 Rev Ed), s 388(1) – Security for costs
- Bankruptcy Act (referenced in the case metadata)
- Companies Act (referenced in the case metadata)
Cases Cited
- [2008] SGHC 230
- [2011] SGHC 11
- [2011] SGHC 228
- [2013] SGHCR 10
- [2014] SGHC 219
- [2017] SGHC 15
- [2019] SGHCR 1
Source Documents
This article analyses [2019] SGHCR 01 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.