Hyflux Ltd (In Compulsory Liquidation) and others v KPMG LLP

Hyflux Ltd, which went into compulsory liquidation on 21 July 2021, was the holding company of Hydrochem (S) Pte Ltd and Tuaspring Pte Ltd. These three are the remaining plaintiffs in Suit No 268 of 2022 against the auditors KPMG LLP. The plaintiffs endorsed their writ with claims in breach of contract, breach of statutory duty, misrepresentation and negligence, and filed a 45-page Statement of Claim. KPMG filed a 125-page defence.

KPMG asked for further and better particulars. An assistant registrar refused four of its requests (numbers 1, 4, 5 and 6) on the ground that they sought evidence rather than particulars of a cause of action. Request 1 asked how the plaintiffs derived the provision and impairment figures in a table in their pleading; Requests 4 to 6 asked for the basis of averments that Tuaspring's costs of performing its obligations under the Water Purchase Agreement exceeded the expected economic benefits at each reporting date. KPMG appealed in Registrar's Appeal No 181 of 2023, heard by Choo Han Teck J.

1. Whether KPMG's four requests sought particulars of the plaintiffs' pleaded case or were requests for evidence.
2. What pleadings should contain, and whether excess evidence in a statement of claim justifies further particulars.

The judge explained that a plaintiff must state clearly which causes of action it relies on, the facts supporting each, the breaches, and the loss suffered. A 45-page statement of claim usually signals excess material such as opinion, law and evidence, which clutters the pleading. Here the pleading set out background facts and then a heading on KPMG's negligence listing, in meandering and jargon-heavy terms, what a reasonably competent auditor would have done; a breach of contract surfaced in one paragraph although no contract or terms had been pleaded. The court nonetheless discerned that the plaintiffs were suing over KPMG's alleged failure to audit competently, which misled directors, creditors and shareholders, while noting it might be wrong.

If so, KPMG needed only to plead that it had performed its duties competently. Instead its defence was laden with evidence, and the requests concerned evidential assertions that KPMG wanted to counter. The burden of proving why the accounts were wrong lay on the plaintiffs, and that was evidence and argument. The court declined to follow the approach in Quinn Insurance Ltd (under administration) v PricewaterhouseCoopers (a firm) [2019] IESC 13, where parties had responded to pleaded evidence in kind. Pleadings exist to make the case clear and set the bounds of discovery and trial; further particulars are for deserving cases where needed for clarity, and inquiries into evidence belong to later stages.

The court agreed with the assistant registrar that the four requests were requests for evidence, and dismissed KPMG's appeal. Costs here and below were reserved to the trial judge.