Why Litigants Should Pay Close Attention to the Text of Court Documents

Case Note on Management Corporation Strata Title Plan No. 4572 v Kingsford Development Pte Ltd and others [2023] SGHCR 8

Introduction

The introduction of the Rules of Court 2021 has brought with it updates to the text of “standard form” Court documents. For example, Originating Claims now state that “A notice of intention to contest or not contest an originating claim in Form 10 is to be attached to this originating claim when it is served.”. These updates are not merely cosmetic but are in fact substantive, and parties to lawsuits would be well-advised to take them seriously.

Background

On 30 December 2022, the management corporation of a condominium development at Hillview Rise (the “MCST”) brought Originating Claim No. 499 of 2022 (the “Suit”) against four entities (collectively the “Defendants”), including ADF Waterproof Pte Ltd, a company engaged in the business of waterproofing (the “Waterproofing Company”).

In the Suit, the MCST alleged that there were defects in the development arising from breaches of contract and/or negligence on the part of the Defendants. The MCST, therefore, sought damages against the Defendants.

On 16 January 2023, the MCST served its Originating Claim and Statement of Claim in the Suit on the Waterproofing Company by leaving copies of these documents at the Waterproofing Company’s registered address. Under the Rules of Court 2021, therefore, the Waterproofing Company had until 30 January 2023 to file a notice stating whether it intended to contest the MCST’s claim or not.

In view of the Waterproofing Company’s failure to file such notice by 30 January 2023, the MCST applied for and obtained judgment in default against the Waterproofing Company (the “Default Judgment”). (By way of aside, the other Defendants had all filed their respective notices of intention to contest the MCST’s claim within the applicable deadlines.)

On 22 March 2023, the Waterproofing Company filed Summons No. 795 of 2023, which was its application for the Default Judgment to be set aside (the “Setting-Aside Application”).

Review of the Applicable Law

In determining the Setting-Aside Application, the High Court took the opportunity to review the existing law on when default judgments may be set aside.

Referring in particular to the leading Court of Appeal decision of Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] 4 SLR(R) 907, the High Court summarised the applicable principles as follows:

• The first step taken by the Court in deciding whether to set aside a default judgment is determining whether the default judgment has been obtained regularly or irregularly.
  • A default judgment is considered to have been regularly obtained if it has been obtained purely due to the defendant’s failure to follow applicable rules of procedure (such as filing a notice of intention to contest by the relevant deadline).
  • A default judgment is considered to have been irregularly obtained if the claimant has, in applying for default judgment, itself committed a breach of procedural rules (such as applying for default judgment earlier than permitted) or made clerical or administrative errors (such as entering default judgment for an incorrect sum)
• The second step is applying the relevant legal test to the facts following the Court’s determination, in accordance with the first step, on whether the default judgment in question is regular or irregular.
  • A regularly obtained default judgment will generally only be set aside if the defendant can prove that it can, in response to the claimant’s claim, raise an arguable defence worth trying.
  • An irregularly obtained default judgment will, especially if it involves a breach of procedural rules on the claimant’s part, generally be set aside as of right unless there are factors justifying an upholding of the default judgment, such as where:
    • the Court finds that the defendant, even if allowed to defend the claim, is “bound to lose”;
    • there has been an undue delay on the defendant’s part in applying for the default judgment to be set aside; and/or
    • the defendant has admitted liability under the default judgment.

In any case, even where it decides to set aside a default judgment obtained (whether regularly or irregularly) against a defendant, the Court has the discretion to impose conditions on the defendant, such as by ordering that the defendant provide security for the sum claimed before proceeding with its defence.

Arguments Raised and the Court’s Holdings

For the purposes of the first step of the relevant inquiry, the Waterproofing Company argued that the Default Judgment had been irregularly obtained as:

• the MCST’s Originating Claim and Statement of Claim had been served on the Waterproofing Company more than 14 days after the date of the commencement of the Suit; and
• the MCST had failed to attach with the Originating Claim a template Notice of Intention to Contest / Not Contest for the Waterproofing Company to fill up and file in Court.

The High Court rejected the Waterproofing Company’s first contention, explaining that under the relevant rules of procedure, all that the MCST had to do was to take “reasonable steps” to serve its Originating Claim and Statement of Claim on the Waterproofing Company within 14 days after their issuance. On examination of the evidence – in particular, the fact that the MCST’s solicitors had prepared a covering letter dated 13 January 2023 (i.e., 14 days after the commencement of the Suit) for their process server to deliver to the Waterproofing Company – the High Court was satisfied that the MCST had indeed taken reasonable steps as required of them.

However, the High Court accepted the Waterproofing Company’s second contention. Crucially, the High Court noted that the “standard form” Originating Claim prescribed by the Rules of Court 2021 contains the following text:

“You may … file a notice of intention to contest or not contest the originating claim that is attached to this document within [14 days / 21 days] of being served the statement of claim.

…

Notes:

1.     This originating claim must be served within 3 months after the date of issue, unless renewed by order of the Court. A notice of intention to contest or not contest an originating claim in Form 10 is to be attached to this originating claim when it is served.”

The High Court explained that the rationale behind the “standard form” (introduced in 2021 along with the latest edition of the Rules of Court) is to ensure that defendants to lawsuits are made sufficiently aware not only that they face legal proceedings, but also what actions they must take to defend such proceedings and the consequence of failure to take such actions.

On the facts, the MCST had not attached any notice of intention to contest to the copy of the Originating Claim served on the Waterproofing Company. The High Court found this omission by the MCST constituted an instance of non-compliance with the prescribed “standard form”, making the Default Judgment irregular.

Having found that the Default Judgment had been irregularly obtained, the High Court proceeded to the second step of its inquiry (i.e., consideration of whether the Default Judgment ought to be set aside as of right).

The High Court found that there was no reason for the Default Judgment to be set aside as of right. While there had been a breach of procedure on the MCST’s part, this breach was not unduly egregious. Even in the absence of a template notice of intention to contest or not contest, it was clear to the Waterproofing Company, based on the text of the Originating Claim alone, that unless it filed the relevant notice within 14 days, “the Court may give judgment to the claimant”. The prudent thing for the Waterproofing Company to have done in the circumstances, therefore, was to have sought legal advice as expeditiously as possible, instead of waiting for entry of the Default Judgment.

Fortunately for the Waterproofing Company, the High Court found a separate reason to set aside the Default Judgment – namely, that the Waterproofing Company could demonstrate that the defence it sought to run in the Suit was not entirely doomed to fail. However, as the High Court found this intended defence to be tentative and unconvincing, the High Court ordered that the Defendant furnish security in the sum of S$80,000 by way of solicitors’ undertaking as a pre-condition to being allowed to defend the Suit.

Comments

The decision in Management Corporation Strata Title Plan No. 4572 v Kingsford Development Pte Ltd and others [2023] SGHCR 8 provides litigants with several valuable takeaways.

• Claimants in lawsuits acting with a view to entering default judgment should ensure that they comply fully with all relevant procedural rules as contained not only in the Rules of Court 2021 but also in the relevant Practice Directions. As the above case demonstrates, even seemingly minor instances of non-compliance can result in a finding that judgment in default has been entered irregularly, making such judgment easier to set aside.
• Defendants in lawsuits who have been served with Court papers should pay close attention to their contents and should, if necessary, seek legal advice promptly and expeditiously. Along with the introduction of the Rules of Court 2021 have come several modifications to the text of “standard form” Court documents designed at making it easier for defendants to understand the steps they must take, when such steps need to be taken by, and the consequences of failing to take such steps. Consequently, it has become more difficult for defendants, even unrepresented ones, to rely on their ignorance of civil procedure as a basis for setting aside any judgment entered against them in default of their appearance or defence.

If you intend to commence legal proceedings, have been served with Court papers, or otherwise have questions on matters of civil procedure, please feel free to contact us at info@covenantchambers.com. Our team of litigation and dispute resolution lawyers would be glad to assist you.