Cova Group Holdings Ltd v Advanced Submarine Networks Pte. Ltd. & Anor

Facts

Cova Group Holdings Ltd, a company incorporated in the Republic of the Marshall Islands, rented construction equipment to Global Explorer Sdn Bhd, a subcontractor of the first defendant, Advanced Submarine Networks Pte Ltd. The equipment sat on a barge owned by the second defendant, Tiong Woon Offshore Pte Ltd, and was used on a wind power project in Taiwan. After Global Explorer went into liquidation in Malaysia in July 2022, Cova terminated its arrangement and demanded the equipment back. The first defendant kept using it, and the second defendant claimed a lien over it for unpaid charter hire.

Cova sued both defendants in HC/OC 236/2022 for conversion, trespass and detinue, and the first defendant also for unjust enrichment. The defendants' defences relied on alleged representations by Mr Peter Parkinson, Cova's sole director and also a director of Global Explorer, that Global Explorer owned the equipment. The first defendant counterclaimed for losses caused by an injunction Cova had obtained, and the second defendant counterclaimed for fraudulent misrepresentation and unlawful means conspiracy. An assistant registrar ordered Cova to give security for costs of $25,000 to each defendant and later made costs orders against Cova after refusing to strike out its claim for not paying the security. Cova appealed in four Registrar's Appeals.

Issues

1. Whether the court's power to order security for costs against a claimant resident abroad was engaged.
2. Whether it was just to order security, considering the merits, ease of enforcement and any stifling of the claim.
3. Whether overlap between the defences and the counterclaims made security unfair.
4. Whether the costs orders made after the failed striking-out applications should stand.

Holding

Goh Yihan JC dismissed all four appeals. Cova was ordered to furnish security for the defendants' costs up to and including discovery, fixed at $25,000 each for the first and second defendants, with the assistant registrar's orders on the form of security applying. The appeals against the costs orders were also dismissed, and costs of the appeals were left to agreement or written submissions.

Reasoning

The judge held that, although O 9 r 12(1) of the Rules of Court 2021 does not repeat the old words about it being just to order security, the court must still ask that question in a two-stage inquiry guided by the Ideals. Cova was plainly resident abroad, and a possible future Singapore co-party did not change that.

Both sides had reasonable prospects. Cova's ownership documents were open to question, and Mr Parkinson's knowledge could arguably be attributed to it. Enforcement would be hard because the equipment, Cova's only claimed Singapore asset, was the very thing in dispute, and there was no reciprocal enforcement arrangement with the Marshall Islands. Cova had not shown that security of S$50,000 would stifle its claim; it said only that its finances would be precarious. The judge also summarised when impecuniosity caused by a defendant counts against security.

On overlap, the judge said the real concern is unjust advantage. That arises where a struck-out claimant must still fight the same issues in the counterclaim, and where the defendant would have sued anyway. The first defendant's injunction counterclaim overlapped substantially but existed only because Cova sued, so it was in substance a defence. The second defendant's conspiracy counterclaim had elements largely separate from ownership, so the overlap was not substantial. The quantum was not disturbed. The costs appeals failed because they depended on the security appeals, and Cova should not benefit from its own failure to pay security on time.

From the judgment