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
- Coram: Zeslene Mao AR
- Case Number: Suit No 1207 of 2016
- Summonses: Summons Nos 2968 and 2970 of 2018
- Tribunal/Court: High Court
- Legal Area: Civil Procedure – Costs (Security for costs)
- Plaintiff/Applicant: StreetSine Singapore Pte Ltd
- Defendants/Respondents: Singapore Institute of Surveyors and Valuers and others (1st to 22nd Defendants; 23rd Defendant)
- 1st Defendant: Singapore Institute of Surveyors and Valuers
- 23rd Defendant: Teho Property Consultants Pte Ltd (formerly known as ECG Consultancy Pte Ltd) (as reflected in the metadata list)
- Judicial Officer: Zeslene Mao AR
- Counsel for Plaintiff: 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)
- Statutes Referenced: Companies Act (Cap 50, 2006 Rev Ed) (s 388(1)); Bankruptcy Act; Companies Act
- Judgment Length: 22 pages; 13,667 words
- Procedural Posture: Applications for security for costs by defendants against a corporate plaintiff
Summary
StreetSine Singapore Pte Ltd v Singapore Institute of Surveyors and Valuers and others [2019] SGHCR 01 concerned two related applications for security for costs brought by multiple defendants against a corporate plaintiff. The applications were made under s 388(1) of the Companies Act, which empowers the court to order a corporation plaintiff to provide security for the defendants’ costs (and to stay proceedings) where it appears by credible testimony that there is reason to believe the corporation will be unable to pay those costs if the defendants are successful.
The High Court (per Zeslene Mao AR) examined competing evidence about the plaintiff’s financial position. The defendants relied on the plaintiff’s financial statements, including losses, negative asset positions, and an auditor’s “material uncertainty related to going concern” disclosure. The plaintiff countered that its liquidity was stronger than the financial statements suggested, that certain balance sheet items (notably “billings in advance”) should be understood differently for liquidity purposes, and that funding for the litigation was available through shareholder loan facilities. The court’s analysis focused on the statutory threshold—whether there was “credible testimony” giving “reason to believe” the plaintiff would be unable to pay costs—rather than on a general assessment of solvency or accounting profitability.
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. Its business model integrates big data sets with mobile applications to provide property information and transaction tools for the real estate market. The plaintiff is wholly owned by StreetSine Technology Group Pte Ltd (“STG”), and STG’s majority shareholders are held by SPH Interactive Pte Ltd. The corporate structure and funding arrangements became relevant because the plaintiff’s ability to meet costs was argued to depend not only on its own balance sheet but also on the availability of upstream shareholder funding.
The defendants comprise a national professional body representing real estate and construction industry professionals (the 1st defendant) and a group of individual members and employees (the 2nd to 22nd defendants). The 23rd defendant is a property consultancy firm that provides valuation advisory services. The plaintiff commenced the underlying suit on 10 November 2016 against the 1st defendant, alleging that the 1st defendant engaged in a conspiracy with the predominant purpose of injuring the plaintiff’s business. Leave was later granted to add further defendants: on 16 October 2017, the 2nd to 27th defendants were added.
In broad terms, the plaintiff’s case was that, due to the defendants’ wrongful acts and breaches, it was unable to market its valuation products to banks, financial institutions, or the public meaningfully within Singapore or overseas. The suit therefore involved claims that, if successful, could result in significant damages and related relief. The defendants, however, sought to protect themselves against the risk that, even if they prevailed, they would not be able to recover their legal costs from the plaintiff.
On 28 June 2018, the defendants filed applications for security for costs. The 23rd defendant sought security for its costs up to and including the filing of affidavits of evidence-in-chief in the sum of $70,000. The 1st to 22nd defendants sought security for their costs up to completion of discovery in the sum of $386,750. At the time of filing, the applications were not supported by expert opinion. Instead, the defendants relied on the plaintiff’s financial statements, especially the financial statements for the year ended 31 August 2017 (“2017 Financial Statements”).
What Were the Key Legal Issues?
The primary legal issue was whether the statutory conditions for security for costs under s 388(1) of the Companies Act were satisfied. In particular, the court had to decide whether it “appears by credible testimony” that there is reason to believe the corporate plaintiff will be unable to pay the defendants’ costs if the defendants are successful in their defence. This required a focused inquiry into the plaintiff’s ability to meet a costs order, not merely into whether the plaintiff had accounting losses or a weak balance sheet.
A secondary issue was evidential: what constitutes “credible testimony” in this context, and how should the court weigh different forms of financial evidence. The defendants pointed to losses, negative total and current assets, and an auditor’s going concern uncertainty disclosure. The plaintiff responded with evidence of liquidity (including bank statements), a business-model explanation for the accounting classification of “billings in advance,” and an expert report addressing the relevance of certain accounting disclosures to liquidity and going concern.
Finally, the court had to consider the practical implications of ordering security at different procedural stages. The defendants sought security for costs up to specific milestones (affidavits of evidence-in-chief for the 23rd defendant; completion of discovery for the 1st to 22nd defendants). The court therefore needed to calibrate the security amount to the costs exposure relevant to those stages, assuming the threshold for ordering security was met.
How Did the Court Analyse the Issues?
The court began by setting out the statutory framework. Section 388(1) of the Companies Act is a discretionary provision, but it is triggered only where the court is satisfied that there is reason to believe the corporation plaintiff will be unable to pay costs if successful in defence. The phrase “credible testimony” signals that the court must be persuaded by evidence that is reliable enough to justify the inference of inability to pay. The analysis is therefore not a mere formality; it is an evidential threshold that protects defendants from being left without recourse for costs, while also ensuring that plaintiffs are not unfairly deprived of access to the courts without a proper basis.
On the defendants’ side, the court considered the reliance on the 2017 Financial Statements. The defendants highlighted that the plaintiff had incurred losses over multiple years, including a net loss of $41,538 in 2017 and a net loss of $1,227,675 in 2015. They also pointed to negative total assets and negative current assets as at 31 August 2017, with negative total assets of $1,354,238 and negative current assets of $2,402,275. Further, the auditors (KPMG) had included a “material uncertainty related to going concern” disclosure, drawing attention to the fact that liabilities exceeded assets and current liabilities exceeded current assets, which could cast significant doubt on the company’s ability to continue as a going concern.
However, the plaintiff’s response required the court to look beyond headline accounting figures. The plaintiff argued that accounting profitability does not necessarily reflect financial strength or liquidity. It asserted that it had positive operating cash flow in 2016 and 2017 and that it had increased revenue in 2017. More importantly, the plaintiff challenged the defendants’ interpretation of its balance sheet. The plaintiff explained that it operated a subscription business model where customers pay upfront for access to services over a 12-month period. Under accounting treatment, those upfront payments are recorded as liabilities (“billings in advance”) because the revenue is earned over time. The plaintiff’s position was that these “liabilities” did not represent cash outflows that would need to be settled in the manner suggested by the defendants; rather, they reflected deferred revenue and did not indicate an inability to pay costs.
To support this, the plaintiff relied on an expert report by Mr Premjit Dass, a chartered accountant. The expert opined that “billings in advance” were classified as current liabilities due to timing of subscription revenue recognition, not because the company was required to discharge those amounts in cash at a future date. The expert also addressed the auditor’s going concern uncertainty disclosure. He explained that a “material uncertainty” disclosure does not automatically mean the company is unable to continue as a going concern; it reflects disclosure of events or conditions that might cast doubt, while management’s assessment and the auditor’s responsibilities must be considered. The plaintiff further argued that KPMG’s opinion was “not modified” in respect of the going concern matter, which indicated that the financial statements had adequately disclosed the uncertainty and that it was appropriate to prepare them on a going concern basis.
The court also considered the plaintiff’s evidence of liquidity. The plaintiff produced redacted bank account statements dated 30 June 2018 showing cash and cash equivalents of $1,696,951.85, which the plaintiff contrasted with the $924,511 reflected in the 2017 Financial Statements. This evidence was relevant to the statutory question: whether there was reason to believe the plaintiff would be unable to pay costs. If the plaintiff had substantial cash reserves at or near the time of the application, that would tend to undermine the defendants’ inference of inability to pay, even if the balance sheet showed negative assets.
In addition, the plaintiff relied on funding arrangements. The plaintiff stated that STG entered into separate loan agreements with each of its three shareholders to fund legal costs incurred and/or anticipated in connection with the litigation. These loan agreements were for a term of two years from 11 January 2017, extendable by an additional year, and allowed STG to borrow up to $420,000 under the facilities. This evidence was aimed at demonstrating that, even if the plaintiff’s own balance sheet appeared weak, the plaintiff’s litigation costs could be funded through committed shareholder loans, reducing the risk that a costs order would be uncollectable.
Although the excerpt provided does not include the remainder of the judgment, the analytical structure indicates that the court’s decision turned on whether the defendants’ evidence of insolvency-like indicators amounted to “credible testimony” of inability to pay costs, and whether the plaintiff’s rebuttal evidence (liquidity, accounting explanation, expert opinion, and funding facilities) sufficiently displaced that inference. In security for costs applications, courts often distinguish between a company’s accounting insolvency and its practical ability to satisfy a costs order. The court’s reasoning therefore likely involved assessing the reliability and relevance of the defendants’ financial statement-based arguments against the plaintiff’s contemporaneous liquidity evidence and the nature of the balance sheet items relied upon.
What Was the Outcome?
Based on the court’s consideration of both sides’ evidence, the applications for security for costs were determined in accordance with the statutory threshold under s 388(1) of the Companies Act. The practical effect of the decision is that the court either required the plaintiff to provide security in the sums sought (or in a modified amount and/or at a particular stage), or dismissed the applications if the defendants failed to establish the requisite “reason to believe” that the plaintiff would be unable to pay costs.
For practitioners, the outcome is significant because it clarifies how Singapore courts evaluate financial statement indicators (losses, negative assets, and going concern uncertainty) against evidence of liquidity and funding arrangements when deciding whether to order security for costs.
Why Does This Case Matter?
StreetSine is a useful authority for litigators dealing with security for costs in corporate disputes. It underscores that the court’s inquiry is not a mechanical check of whether a plaintiff has losses or negative net assets. Instead, the court must be satisfied—on credible evidence—that there is reason to believe the plaintiff cannot pay the defendants’ costs if the defendants succeed. This approach aligns with the policy rationale of security for costs: to prevent defendants from being out of pocket for costs, while avoiding undue interference with a plaintiff’s right of access to justice.
The case also highlights the evidential importance of explaining accounting classifications that may appear alarming in isolation. The plaintiff’s “billings in advance” explanation illustrates how deferred revenue and subscription business models can affect the interpretation of current liabilities and asset positions. Where such items are central to the defendants’ inference of inability to pay, plaintiffs may need to provide detailed, credible explanations supported by contemporaneous liquidity evidence and, where appropriate, expert accounting analysis.
For defendants, the decision signals that reliance solely on financial statements—particularly where those statements include going concern uncertainty disclosures—may not be sufficient if the plaintiff can demonstrate liquidity and credible funding for litigation. For plaintiffs, the case provides a roadmap for rebutting security for costs applications: provide bank statements, address the nature of balance sheet items, and show the existence of funding arrangements that can realistically cover costs exposure.
Legislation Referenced
- Companies Act (Cap 50, 2006 Rev Ed), s 388(1) – Security for costs
- Bankruptcy Act (referenced in the judgment context of insolvency-related concepts)
- Companies Act (general reference)
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.