Case Details
- Citation: [2010] SGHC 355
- Title: Wonda Kitchareon Co Ltd v Greenlam Asia Pacific Pte Ltd
- Court: High Court of the Republic of Singapore
- Date of Decision: 08 December 2010
- Judge: Tan Lee Meng J
- Coram: Tan Lee Meng J
- Case Number: Suit No 275 of 2010 (Registrar's Appeal No 400 of 2010)
- Tribunal/Court Level: High Court (appeal from Assistant Registrar)
- Parties: Wonda Kitchareon Co Ltd (plaintiff/respondent) v Greenlam Asia Pacific Pte Ltd (defendant/appellant)
- Applicant/Respondent Roles: Appellant/Defendant: Greenlam Asia Pacific Pte Ltd; Respondent/ Plaintiff: Wonda Kitchareon Co Ltd
- Legal Area: Civil Procedure (Security for Costs)
- Statutes Referenced: Companies Act (Cap 50, 2006 Rev Ed)
- Rules Referenced: Rules of Court (Cap 322, R 5, 2006 Rev Ed), Order 23
- Counsel for Appellant/Defendant: Jagjit Singh Gill s/o Harchand Singh (Gurdip & Gill)
- Counsel for Respondent/Plaintiff: Michael Moey Chin Woon (Moey & Yuen)
- Judgment Length: 4 pages, 1,956 words
- Decision Date (hearing reference): 8 December 2010
Summary
Wonda Kitchareon Co Ltd v Greenlam Asia Pacific Pte Ltd [2010] SGHC 355 concerned an application for security for costs in a commercial dispute between a Thai wholesaler and a Singapore manufacturer/distributor. The defendant, Greenlam, sought an order that the plaintiff, Wonda (a company incorporated in Thailand), furnish security for the defendant’s costs. The Assistant Registrar dismissed the application, and Greenlam appealed to the High Court.
Tan Lee Meng J affirmed the Assistant Registrar’s decision and dismissed the appeal. The High Court held that although the plaintiff was ordinarily resident out of the jurisdiction, the defendant failed to adduce credible evidence that there was reason to believe the plaintiff would be unable to pay the defendant’s costs if the defence succeeded. The court also emphasised that security for costs is not automatic for foreign plaintiffs, and that the court should consider all circumstances, including the likelihood of success and whether granting security would indirectly assist the defendant’s counterclaim.
What Were the Facts of This Case?
Wonda Kitchareon Co Ltd (“Wonda”) is a Thai wholesaler of furniture fittings and furniture parts. Its customers are mainly developers, architects and designers. Greenlam Asia Pacific Pte Ltd (“Greenlam”) is a Singapore company that manufactures and distributes laminate products. The dispute arose out of two shipments of laminate products supplied by Greenlam to Wonda.
On 21 April 2009, Wonda purchased 18,820 pieces of “New Mika” laminate and 13,700 pieces of “Liner” laminate from Greenlam. Because Greenlam could not supply all the goods in one shipment, the parties agreed that Wonda would issue letters of credit after the bills of lading for the shipped goods had been issued. This arrangement meant that payment was tied to shipment documentation.
Wonda’s complaint was that the first shipment created “numerous problems”. Wonda alleged that 4,000 pieces of laminate were of the wrong colour, that the thickness and dimensions of many sheets did not conform to contract specifications, and that there were no shipping marks on the crates. Wonda also claimed that many laminate sheets were damaged, and that the shipping documents did not comply with the terms of the letter of credit. On these grounds, Wonda claimed it suffered damage.
There were also alleged problems with the second shipment. After experiencing difficulties with the first shipment, Wonda wanted to inspect the goods before paying. However, Greenlam insisted on receiving payment before inspection. Wonda refused to pay without inspection and subsequently informed Greenlam that it would not accept further shipments of laminate from Greenlam.
What Were the Key Legal Issues?
The principal legal issue was whether the High Court should order Wonda to furnish security for Greenlam’s costs of the action. This required the court to apply the discretion under Order 23 of the Rules of Court, particularly Order 23 r 1(1)(a), which allows security where it appears to the court that the plaintiff is ordinarily resident out of the jurisdiction. The court also considered the related statutory provision in s 388 of the Companies Act, which addresses security for costs where there is credible testimony suggesting the company will be unable to pay costs if successful in its defence.
Second, the court had to determine what evidence was required from the defendant to justify the exercise of discretion. Greenlam did not provide evidence that Wonda would be unable to pay costs if it failed. The court therefore had to decide whether Greenlam’s submissions—largely that Wonda was foreign and that Greenlam had a bona fide defence—were sufficient to warrant an order for security.
Third, the court had to consider the interaction between the claim and Greenlam’s counterclaim. Greenlam had counterclaimed, and the court needed to assess whether ordering security would effectively assist Greenlam in pursuing its counterclaim, particularly where the counterclaim and defence were connected to the same subject matter.
How Did the Court Analyse the Issues?
Tan Lee Meng J began by setting out the legal framework. Order 23 of the Rules of Court provides that where, on a defendant’s application, it appears to the court that the plaintiff is ordinarily resident out of the jurisdiction, the court may order security for costs if it is just to do so having regard to all the circumstances. The court also referred to s 388 of the Companies Act, which permits the court to require security and stay proceedings where credible testimony indicates a reason to believe that the company will be unable to pay the defendant’s costs if successful in its defence.
The court relied on the Court of Appeal’s guidance in Creative Elegance (M) Sdn Bhd v Puay Kim Seng [1999] 1 SLR(R) 112. The High Court noted that while the wording of Order 23 r 1(1)(a) and s 388 differ, the difference lies in the precondition for invoking each provision. Under Order 23, the condition is that the plaintiff is ordinarily resident out of the jurisdiction. Under s 388, the condition is credible testimony that there is reason to believe the company will be unable to pay costs if successful. Once the precondition is satisfied, the court’s discretion is engaged and the court decides whether it is just to order security and the extent of security.
In the present case, the High Court found that Greenlam furnished no evidence whatsoever that there was reason to believe Wonda would be unable to pay costs if Greenlam succeeded in its defence. Indeed, Greenlam’s own conduct suggested otherwise. In response to Wonda’s letter dated 18 June 2009 concerning the supply of more laminate sheets than ordered, Greenlam had replied: “You are a very big listed company. 400 sheets is a very small quantity for you.” This response undermined Greenlam’s attempt to portray Wonda as financially incapable of meeting costs.
Accordingly, the court treated the application as one governed by Order 23 r 1(1)(a), rather than s 388. However, the judge emphasised that it does not follow that a foreign plaintiff will automatically be ordered to furnish security. The fact that the plaintiff is ordinarily out of the jurisdiction merely invokes the court’s discretion; it does not create a presumption in favour of or against security. This approach was supported by Jurong Town Corp v Wishing Star [2004] 2 SLR(R) 427, where Chao Hick Tin JA explained that the court has complete discretion and must balance competing factors, with no rigid objective criteria for weighting each factor.
Tan Lee Meng J then turned to the principles governing the exercise of discretion. The court cited Porzelack KG v Porzelack (UK) [1987] 1 WLR 420, where Browne-Wilkinson V-C described security for costs as an “entirely general discretion” to award or refuse security having regard to all circumstances. The authorities indicate that if other matters are equal, it is normally just to order security against a non-resident plaintiff. The key question remains what is the just answer in all the circumstances.
A further factor is whether the plaintiff has a bona fide claim with a reasonable likelihood of success. Importantly, the court does not conduct a detailed examination of the merits on an interlocutory application. In Porzelack KG, the Vice-Chancellor cautioned that security for costs applications should not become a full merits hearing, because they are decided at an interlocutory stage on inadequate material and without a full evidential hearing. A similar approach was adopted in Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Alhadad [1995] 2 SLR(R) 407.
Applying these principles, the High Court found that Wonda’s claim had a likelihood of succeeding. The judge observed that Greenlam had acknowledged shortcomings and defects in its shipments and had suggested ways to remedy the problems. This acknowledgement supported the conclusion that Wonda’s claim was not frivolous or hopeless.
Greenlam’s submissions were also found to be insufficient. Apart from not alleging inability to pay costs, Greenlam’s counsel asserted only that Wonda was foreign and that Greenlam had a bona fide defence on the merits. The court held that these assertions, without more, did not justify an order for security. The court’s reasoning reflects a consistent theme in Singapore security for costs jurisprudence: the defendant must do more than rely on the plaintiff’s foreign status; it must engage with the relevant factors that make security “just” in the circumstances.
Finally, the court considered the counterclaim factor. Greenlam had a counterclaim arising out of the same subject matter and connected to the grounds of defence. The judge referred to Wishing Star, where the Court of Appeal explained that where a defence to the claim and counterclaim are launched from the same platform, the time and work required for trial of the counterclaim would be substantially the same as for defending the claim. In such a situation, granting security could indirectly aid the defendant to pursue its counterclaim. In the present case, the judge found that the counterclaim was intrinsically connected with the defence. The affidavit evidence from Greenlam’s Chief Operating Officer stated that Greenlam raised a counterclaim for loss and damage as a result of Wonda’s refusal to accept delivery and alleged unlawful repudiation of the sales agreement.
Given that the counterclaim and defence were connected, ordering security would risk indirectly assisting Greenlam in prosecuting its counterclaim. When this was combined with the absence of evidence on inability to pay, the likelihood of success of Wonda’s claim, and the general principle that foreign residence alone does not justify security, the judge concluded that it was not just to order security for costs.
What Was the Outcome?
The High Court dismissed Greenlam’s appeal and affirmed the Assistant Registrar’s decision to dismiss Greenlam’s application for security for costs. Practically, this meant that Wonda was not required to furnish security for Greenlam’s costs as a condition for continuing the proceedings.
The decision therefore allowed Wonda’s claim to proceed without the financial burden of providing security, while Greenlam continued to defend and pursue its counterclaim without being supported by an order requiring Wonda to post security.
Why Does This Case Matter?
This case is a useful illustration of how Singapore courts approach security for costs applications involving foreign plaintiffs. It reinforces that the discretion under Order 23 r 1(1)(a) is not exercised mechanically. The plaintiff’s foreign residence is only the trigger for the court’s discretion; it does not create a presumption that security should be ordered.
For practitioners, the decision highlights the evidential burden on the applicant. Where the defendant seeks security, it should be prepared to adduce credible evidence relevant to the statutory and discretionary factors, particularly evidence addressing inability to pay costs. Merely asserting that the plaintiff is foreign or that the defendant has a bona fide defence is unlikely to suffice.
The case also underscores the importance of considering the relationship between the claim and counterclaim. Where the counterclaim is connected to the defence and arises from the same platform, courts may be reluctant to order security because it could indirectly fund the defendant’s counterclaim. This is a strategic consideration for both plaintiffs and defendants when framing security applications and counterclaims.
Legislation Referenced
- Rules of Court (Cap 322, R 5, 2006 Rev Ed), Order 23 r 1(1)(a)
- Companies Act (Cap 50, 2006 Rev Ed), s 388
Cases Cited
- Wonda Kitchareon Co Ltd v Greenlam Asia Pacific Pte Ltd [2010] SGHC 355
- Creative Elegance (M) Sdn Bhd v Puay Kim Seng [1999] 1 SLR(R) 112
- Jurong Town Corp v Wishing Star [2004] 2 SLR(R) 427
- Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534
- Porzelack KG v Porzelack (UK) [1987] 1 WLR 420
- Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Alhadad [1995] 2 SLR(R) 407
Source Documents
This article analyses [2010] SGHC 355 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.