HYFLUX LTD (IN COMPULSORY LIQUIDATION) & 37 Ors v LUM OOI LIN

Facts

Hyflux Ltd (in compulsory liquidation) and related companies and office-holders sued Lum Ooi Lin in Suit No 267 of 2022. The plaintiffs and the defendant agreed that security for the defendant's costs should be given, in the sum of $90,000, but disagreed on its form. A Senior Assistant Registrar ordered security, up to the filing or exchange of affidavits of evidence-in-chief, by a joint costs undertaking from the plaintiffs' litigation funders, Omni Bridgeway Limited (OB) and Omni Bridgeway (Singapore) Pte Ltd (OBS), on terms satisfactory to the defendant, failing which a banker's guarantee, a solicitor's undertaking or payment into court. The effect was to leave the final form of security to the defendant.

The first, second, 16th, 37th and 38th plaintiffs appealed (Registrar's Appeal No 42 of 2023), asking that security be limited to the funders' undertaking, which they refined by a letter dated 6 April 2023. The defendant wanted a solicitor's undertaking. She argued the funders' undertaking was inadequate: the plaintiffs had not shown that OBS had any assets, so in her submission the undertaking was in effect only from OB, a foreign company, and enforcing it abroad could cost more than the secured sum.

Issues

1. What principles govern the form in which security for costs must be given in Singapore.
2. Whether conventional forms of security such as bank guarantees or payment into court are a default starting point.
3. Whether an undertaking from the plaintiffs' litigation funders was adequate security for the defendant's costs.

Holding

Goh Yihan JC allowed the plaintiffs' appeal. The plaintiffs were ordered to furnish security for the defendant's costs up to the filing or exchange of affidavits of evidence-in-chief by the undertaking to the court jointly given by OB and OBS. Unless the parties agreed costs of the appeal, they were to file written submissions within 14 days.

Reasoning

The court noted there was no Singapore decision on how to choose the form of security. O 23 r 2 of the Rules of Court 2014 lets the court direct security in any manner it sees fit, and O 9 r 12 of the Rules of Court 2021 is materially the same. Adopting the principles from DIF III Global, a Victoria decision, the court reduced them to two: the plaintiff is not restricted to any fixed form of security, and the plaintiff must show that its proposed form is adequate, meaning it gives a fund or asset against which a successful defendant can readily enforce a costs order.

The court declined to follow English and Australian decisions treating payment into court or bank guarantees as a default. The rule's wording did not fetter the discretion, there was no principled reason to prefer some forms over others, and once security was adequate its purpose was met. Concerns about satellite litigation belonged to the adequacy inquiry. Forms with a long history may simply be easier to show as adequate.

The defendant's cases on funders' undertakings turned on their own facts and were decided when litigation funding was a young business. On adequacy, the undertaking was irrevocable and unconditional and akin to a bank guarantee. OBS's audited accounts showed net assets of about S$2.2m, and OB, a listed company, had net assets of about S$605m; the risk of either failing was extremely low and the sum was a small fraction of their assets. As litigation funders, they had strong reputational reasons to honour it. OBS was in Singapore, Singapore judgments could be enforced in Australia with relative ease, and the refined terms committed the funders to consent to judgment and its registration in Australia and to give notice if funding ended.

From the judgment