28 April, 2016
Obtaining a Judgment on the Merits in Singapore for the Purpose of Enforcement Overseas
In Seagate Technology International v Vikas Goel [2016] SGHC 12 (“Seagate v Vikas”), the defendant provided personal guarantees in favour of the plaintiff for banking facilities granted to the defendant’s company. The defendant’s company defaulted on the repayment of the banking facilities, and the plaintiff sought to enforce the guarantee by commencing action in the Singapore Courts.
Although the plaintiff commenced action against the defendant, the defendant did not enter an appearance in the case. Instead of seeking to obtain a judgment in default of appearance, the plaintiff sought to obtain judgment on the merits of its case. This was because the plaintiff intended to enforce the judgment in India, and Indian law did not recognise for enforcement purposes a foreign judgment that is obtained by default.
The court in Seagate v Vikas considered the facts of the case and took the position that the most appropriate course of action was to adduce evidence in the normal course of trial and to put it beyond doubt that the merits of the case had been duly considered. After hearing the plaintiff’s evidence and considering the documentary evidence presented, the Singapore Court was satisfied that the defendant’s liability under the guarantee has been established. Accordingly, the Court granted judgment on the merits of the case in favour of the plaintiff.
The law in Singapore on the issue of granting judgment on merits
In this case, the Plaintiff made the application for judgment on the merits of its case pursuant to O 13 r 1 of the Rules of Court. The learned Judicial Commissioner hearing the application took the view that O 35 r 1(2) accorded the court complete discretion to decide whether to proceed with the trial of the action or to dismiss the action or to give judgment without trial.
In an earlier case, the court in Indian Overseas Bank v Svil Agro Pte Ltd and Others [2014] 3 SLR 892 (“IOB v Svil”) had applied O 13 r 1 read with O 92 r 4 (which concerned the Court’s inherent powers) of the Rules of Court to try an action and give judgment on the merits, notwithstanding the absence of the defendant’s absence.
The circumstances in both Seagate v Vikas and IOB v Svil are similar in that the plaintiffs in each case had sought judgments in order to enforce guarantees.
In Singapore, the courts have generally been prepared to grant judgment on the merits of the case in other situations. In Singapore Telecommunications Ltd v APM Infotech Pte Ltd [2011] SGHC 147 (“Singtel v APM”), the court granted a judgment on the merits in respect of a breach of a contract whereby the plaintiff had agreed to supply the defendant with international calling services in consideration of monthly fees payable by the defendant. The plaintiff rendered monthly invoices to the defendant for the services it provided. They were sent to the billing address provided by the defendant. However, the defendant failed to pay and subsequently the plaintiff terminated the agreement.
It is clear that the courts are more willing to grant judgments on the merits in cases involving debts owed, especially where the liabilities of the defendants for monies owed are clear from the documentary evidence. For instance in Singtel v APM, the invoices were adduced as evidence. Where the case turns and falls on oral evidence for instance an action on a voidable transaction, the courts may be less inclined to grant a judgment on the merits in the absence of proof and rebuttal by oral evidence from the defendant’s witnesses and cross examination.
Significance of Seagate v Vikas
The practical significance of cases such as Seagate v Vikas and IOB v Svil, cannot be understated. If the Singapore courts had refused to exercise its discretion to grant judgment to the merits, the plaintiffs would be forced to commence fresh proceedings in India, which would be costly and likely further delay them from obtaining suitable relief.
In the modern globalised world where claims often involve parties from different jurisdictions, enforcement is of key concern to a plaintiff. Evidently, these cases demonstrate the Singapore courts’ appreciation of some of the jurisdictional hurdles that parties may face when engage in cross-border business.
Considerations moving forward
If you intend to commence action against a defendant who does not appear in the proceedings, it is essential to consider the laws of the country in which you intend to enforce the judgment. If the laws of that country only recognise foreign judgments that are given on the merits, it would be useful to consider applying for such a judgment in Singapore rather than to commence fresh proceedings in the country where enforcement is intended.
For further information, please contact:
Pradeep Pillai, Partner, Shook Lin & Bok
pradeep.pillai@shooklin.com
