[2017] SGHCR 5 (2)

IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE
[2017] SGHCR 5
Suit No 1090 of 2016
Between
Siva Industries and Holdings

Ltd
… Plaintiff
And
Foreguard Shipping I
Singapore Pte Ltd
… Defendant
GROUNDS OF DECISION
[Civil Procedure – Security for Costs]
Version No 1: 27 Oct 2020 (22:40 hrs)

TABLE OF CONTENTS
INTRODUCTION............................................................................................1
IS THE PLAINTIFF IMPECUNIOUS? ........................................................3
SHOULD THE COURT EXERCISE ITS DISCRETION TO ORDER

SECURITY FOR COSTS?..............................................................................7
OVERLAP BETWEEN THE DEFENCE AND COUNTERCLAIM ................................7
DELAY...........................................................................................................15
THE MERITS OF THE CLAIM ............................................................................16
DIFFICULTY IN ENFORCING COST ORDERS AGAINST THE PLAINTIFF ...............17
CONCLUSION...............................................................................................18

This judgment is subject to final editorial corrections approved by the
court and/or redaction pursuant to the publisher’s duty in compliance
with the law, for publication in LawNet and/or the Singapore Law
Reports.
Siva Industries and Holdings Ltd

v
Foreguard Shipping I Singapore Pte Ltd
[2017] SGHCR 5
High Court — Suit No 1090 of 2016 (Summons No 301 of 2017)

Paul Tan AR
29 March 2017
27 April 2017
Paul Tan AR
1 The present application is brought by the Defendant for an order that

the Plaintiff provide security for costs pursuant to O 23 r 1(1)(a) of the Rules
of Court (Cap 322, R5, 2014 Rev Ed) (“ROC”) and s 388 of the Companies
Act (Cap 50, 2006 Rev Ed). I heard the parties on 29 March 2017 on the issue
of whether the Plaintiff should be made to provide security and reserved my
decision. I now give my decision.
Introduction
2 The Plaintiff is a company incorporated in India. The Defendant is a

company incorporated in Singapore. The Plaintiff’s claim against the
Defendant is pursuant to a deed of counter-guarantee dated 28 September
2012 that the parties entered into.

Siva Industries and Holdings Ltd v
Foreguard Shipping I Singapore Pte Ltd [2017] SGHCR 5
3 The law on how the Court will approach an application for security for
costs pursuant to O 23 r 1(1)(a) of the ROC or under s 388 of the Companies
Act is trite and is set out in Creative Elegance (M) Sdn Bhd v Puay Kim Seng
and another [1999] 1 SLR(R) 112 at [13],
… There is, of course, a difference in the wordings of the two

provisions, but the difference lies in the condition to be
satisfied before the respective provisions can be invoked.
Under O 23 r 1(1)(a) the condition which has to be satisfied
before the court proceeds to exercise its discretion is: if it
appears to the court that the plaintiff is ordinarily resident out
of the jurisdiction. On the other hand, under s 388 the
condition is as follows: if it appears by credible testimony that
there is reason to believe that the plaintiff company will be
unable to pay the costs of the defendant if successful in his
defence. Once the condition under the respective provision is
satisfied, the court’s discretion is invoked, and in exercise of
that discretion the court decides whether or not to order
security for costs against the plaintiff. In such an event,
whether the discretion is one under O 23 r 1(1)(a) or under s
388 the same principles are applicable: the court considers all
the circumstances and decide whether it is just to order the
plaintiff to provide security for costs and the extent of such
security. It is true that O 23 r 1(1)(a) spells out expressly that
“if, having regard to all the circumstances of the case, it is just
to do so”, the court may order the plaintiff to give security for
the defendant’s costs, whereas s 388 is silent in that respect.
However, such words are implicit in the latter provision. The
making of an order for security for costs under s 388 is a
matter of discretion and in exercising its discretion the court
will have regard to all the relevant circumstances and
considers whether it is just to make the order.
4 In considering whether the court should order security to be provided

by the Plaintiff, I would need to determine:
(a) first, whether the court’s discretion to order security for costs
under O 23 r 1(1)(a) of the ROC and s 388 of the Companies Act has
been invoked; and

(b) secondly, whether it is just to order security for costs having

regard to all the relevant circumstances.
5 There is no dispute that the Plaintiff is ordinarily resident outside of

jurisdiction for the purposes of O 23 r 1(1)(a) of the ROC. This in itself is not
conclusive but means that the Court’s jurisdiction to order security under O 23
r 1(1)(a) of the ROC has been invoked. Turning to the Court’s jurisdiction
under s 388 of the Companies Act, the Plaintiff disputes that there is any
reason to believe that it would be unable to pay the costs of the Defendant if
the Defendant is successful in its defence such that the Court’s jurisdiction
under s 388 of the Companies Act is invoked. The Plaintiff also stresses that
the Defence is co-extensive with the Counterclaim made by the Defendant.
6 I turn first to the question of whether the Plaintiff is impecunious

because this is a threshold issue under s 388 of the Companies Act and a
relevant factor as to whether the Court’s discretion under O 23 r 1(1)(a) of the
ROC should be exercised.
Is the Plaintiff impecunious?
7 The Defendant asserts that the Plaintiff is impecunious and relies on

the Plaintiff’s standalone financial statements as at 31 March 2016 (the
“Standalone Accounts”), exhibited by the Plaintiff in the 5th affidavit of
Shankar Varadharajan. The Defendant says that while the balance sheet
appears to show a net asset position of INR 2,50,509 lakhs or approximately
US$379m, the Plaintiff’s true net asset value is a deficit of US$459m.
8 The Defendant highlights that the Plaintiff’s auditors have qualified

their opinion of the Standalone Accounts and thus the Plaintiff’s net asset

position stated in the balance sheet cannot be taken at face value. In their
opinion, the Plaintiff’s auditors issued the following qualifications:
(a) They were unable to comment on the completeness of interest

and penal interest that may need to be included in the financial
statements as of 31 March 2016 and stated that if such interest were
included, the shareholders’ funds would have been reduced by INR
45,060 lakhs (US$68m).
(b) The Plaintiff’s non-current investment in several wholly owned

overseas companies totalling INR 1,53,601 lakhs had been fully eroded
and the Plaintiff had not provided for this permanent diminution in the
value of the investments. The shareholders’ funds should have been
reduced by INR 1,53,601 lakhs (US$232m).
(c) The auditors noted that there were several trade receivables that
were outstanding for more than six months amounting to INR 10,081
lakhs, but stated that they could not comment on the adjustments that
may be necessary to the values of the receivables.
9 The Defendant further highlights that there were two major sources of
liabilities that were not reflected in the balance sheet. The first is an arbitral
award involving the Plaintiff wherein the liability apportioned to the Plaintiff
amounted to INR 69,400 lakhs (the “NTT Docomo Award”). However, as the
Plaintiff was appealing against the arbitral award in the Delhi High Court, the
Plaintiff’s auditors noted that no provision was made for it in the Standalone
Accounts.

10 The second is an arbitral award rendered by a tribunal on 14 October

2015 pursuant to arbitral proceedings brought by Masdar Energy Limited
against the Plaintiff in London (the “Masdar Award”). The plaintiff in the
arbitral proceedings filed High Court Originating Summons No 592 of 2016
(“OS 592”) for leave to enforce the Masdar Award in Singapore and for
judgment to be entered in accordance with the terms of the Masdar Award.
Leave was granted on 14 June 2016 by the Singapore High Court and while,
the Plaintiff applied to set aside the order giving leave to enforce the Masdar
Award, it subsequently withdrew the application. As such, the order of court
made on 14 June 2016 remains valid and binding on the Plaintiff in Singapore.
There is no mention of the Masdar Award in the Standalone Accounts at all
despite the award being rendered on 14 October 2015. The Defendant’s
counsel argues that this amounts to material non-disclosure by the Plaintiff
and its directors to its auditors.
11 The Defendant’s counsel submits that when one considers the auditors’
qualifications to the Standalone accounts together with the NTT Docomo and
Masdar awards, the Plaintiff’s true net asset position is a deficit of US$459m,
indicating that the Plaintiff is impecunious.
12 The Plaintiff’s position is that even if its auditors’ qualifications are

accounted for and given full effect, it still has a net asset value of INR 41,767
lakhs or US$63m. Plaintiff’s counsel submits that the Plaintiff does not
recognise the NTT Docomo Award or the Masdar Award as a debt or liability.
Counsel submits that given that the Plaintiff was appealing the NTT Docomo
Award to the Delhi High Court, it is not a recognised debt or liability. Further,
the Plaintiff did not take part in the arbitral proceedings leading to the Masdar

Award and until leave has been given to enforce the Masdar Award in India, it
was not a liability on the books of the Plaintiff.
13 I find the Plaintiff’s argument untenable. While the NTT Docomo

Award is being appealed before the Delhi High Court, there is no evidence
before me stating that the award is not valid and binding on the Plaintiff. The
Standalone Accounts do not explain why no provision has been made for the
NTT Docomo Award save that it was being appealed.
14 The argument with regard to the Masdar Award is even more tenuous
given that there is a valid and binding Singapore order of court giving leave to
enforce the Masdar Award as if it were a Singapore judgment and for
judgment to be entered against the Plaintiff in the terms of the Masdar Award.
I do not see how simply because the Plaintiff refuses to recognise a valid
Singapore order of court, there is no liability on the Plaintiff. This is especially
when the Plaintiff applied to set aside the order giving leave to enforce the
Masdar Award but then chose to withdraw the application. In my view, I do
not see any reason why either the NTT Docomo Award or the Masdar Award
should be discounted in considering the liabilities against the Plaintiff.
15 I note that the Defendant’s counsel submits that there are several
unexpired guarantees provided by the Plaintiff in respect of several other
entities including subsidiaries and associate companies. These guarantees
amounts to INR 201,532 lakhs or US$305m. However, as the Plaintiff’s
counsel points out, these are contingent liabilities that have not crystallised.
There is no evidence before me to show that there is either a likelihood that
these contingent liabilities have crystallised or are likely to crystallise. As

such, I do not think that these unexpired guarantees should be included in

considering the liabilities of the Plaintiff.
16 Given the Plaintiff’s stated net asset value of INR 250,509 lakhs or
US$379m, after providing for the qualifications by the Plaintiff’s auditors and
the NTT Docomo and Masdar Awards, it would appear that the Plaintiff’s true
net asset value is in fact a deficit of US$155m. In my view, based on the
evidence before me, there is good reason to believe that the Plaintiff will be
unable to pay the Defendant’s costs in the event that the Defendant succeeds
in his Defence.
Should the Court exercise its discretion to order security for costs?
Overlap between the Defence and Counterclaim
17 While the Plaintiff raises several reasons as to why the court should not
exercise its discretion to order security, its main plank is that the Defendant’s
Defence substantially overlaps with its Counterclaim. It is not disputed before
me that the Counterclaim not only subsumes the Defence but is also wider
than the Defence.
18 The Plaintiff argues that the Court of Appeal’s decision in Jurong

Town Corp v Wishing Star Ltd [2004] 2 SLR(R) 427 (“JTC”), affirmed in the
recent Court of Appeal decision of SIC College of Business and Technology
Pte Ltd v Yeo Poh Siah and others [2016] 2 SLR 118 (“SIC”), albeit in obiter,
militates against the court ordering security to be provided where there is
substantial overlap between the Defence and the Counterclaim.
19 The Defendant highlights that in situations where the Plaintiff is an

impecunious corporation, the legislative intent and public policy under s 388

of the Companies Act lean in favour of the court ordering security to be

provided (see Frantonios Marine Services Pte Ltd and another v Kay Swee
Tuan [2008] 4 SLR(R) 224 (“Frantonios”) at [55] and Ho Wing On
Christopher and others v ECRC Land Pte Ltd (in liquidation) [2006] 4
SLR(R) 817 (“ECRC”) at [72]).
20 The Defendant submits that if an impecunious plaintiff was not ordered

to provide security for costs, the defendant in that case would be in a “lose-
lose” situation, a position noted by the English Court at first instance in
Autoweld Systems Ltd v Kito Enterprises LLC [2010] EWCA Civ 1469
(“Autoweld”) at [38].
21 The Defendant further submits that JTC was distinguishable because

the plaintiff in that matter was not impecunious unlike in the present case. It
also highlights that in B J Crabtree (Insulation) Ltd v GPT Communication
Systems Ltd (1990) 59 BLR 43 (“Crabtree”), which was cited in both JTC and
SIC, there were other factors militating against the ordering of security for
costs. Defendant’s Counsel highlighted that in Crabtree,
(a) the English Court of Appeal was not entirely satisfied that the
plaintiff was impecunious;
(b) the plaintiff was a small company and there was a risk that the
application for security was being brought to oppress the plaintiff;
(c) the ordering of security would cause serious burden to the

plaintiff; and

(d) the directors of the plaintiff had given undertakings not to seek
repayment or to be paid from their current accounts with the plaintiff
until the conclusion of the trial of the action or further action.
22 With respect to the attempts made by the Defendant’s Counsel to

distinguish Crabtree, while the aforementioned factors had indeed been
mentioned by the court in Crabtree, they do not provide a complete picture.
For example, while Bingham LJ (as he then was) states at 49 that he was “not
entirely satisfied that the court is shown to have jurisdiction”, he goes on to
say that he was “unwilling to hold that it has not”. In fact, he expressly stated
that he “accordingly assume[d] in the defendant’s favour that the court has
jurisdiction to make an order for security if persuaded that that is the right
order to make.”
23 The real issue that appears to weigh on the English Court of Appeal’s
mind was the effect of an order for security in that case. This is reinforced by
Parker LJ’s observations at 55:
… Here the situation is that, if the money is not paid into

court and the plaintiff’s claim is therefore stayed, the
defendant will still raise issues on the counterclaim which are
precisely the same as the issues which he would raise on the
claim. …
Hence, while several other points were raised, the weighty factor in Crabtree
was the issue of the claim being co-extensive with the counterclaim. This
appears to also be the Court of Appeal’s reading of the case as seen from its
observations in SIC at [82].
24 The Plaintiff and Defendant’s positions highlight the tension between

two competing considerations when the court considers whether to order

security for costs where the Plaintiff is an impecunious corporation but there is
substantial overlap between the Defence and the Counterclaim. The following
considerations pull in different directions:
(a) the express recognition that impecunious companies do not

have an unfettered freedom to commence legal actions against
defendants who cannot be compensated in costs if they win; and
(b) that it is often inappropriate to award security for costs where

the Defence and Counterclaim substantially overlap.
25 There are two principles undergirding the factor to be considered at

[24(b)] above,
(a) first, where the defence overlaps substantially with the

counterclaim, the costs incurred by the defendant in defending itself
may equally, and perhaps preferably, be regarded as costs necessary to
prosecute its counterclaim (Crabtree at 53 cited with approval in JTC
at [20]); and
(b) secondly, ordering security for costs in such a situation may

result in a plaintiff succeeding in his defence to the counterclaim by
relying on the same issues he raised in his main claim, and after having
“incurred all the costs required to bring that claim to judgment in the
prosecution of his defence of the … counterclaim” he may still be
unable to secure judgment on his claim (Dumrul v Standard Chartered
Bank [2010] CLC 661 (“Dumrul”) at [18] cited with approval in SIC at
[84]).
26 I propose to deal with the second principle first.
10

27 In SIC, the Court of Appeal noted that the plaintiff was impecunious
and there was no question that the court had jurisdiction to order security for
costs under s 388 of the Companies Act. However, the Court of Appeal
highlighted that where the Plaintiff is impecunious and the claim and
counterclaim raise the same issues, ordering security for costs may give rise to
an unfair result for the reasons at [25(b)] above. I should pause here to note
that while the present case involved a situation where the Defence and the
Counterclaim overlapped, the Court of Appeal in SIC noted at [82] that similar
reasons apply.
28 However, while the Court of Appeal remarked that it would normally

not be just to order security for costs in such situations, it went on to state at
[83] that the prejudice of the plaintiff being limited in the continuing litigation
may be offset by the possibility that there may be no continuing litigation at all
(see also Autoweld at [60]).
29 This is a point that was considered by the English court in Dumrul at

[15] where it had been conceded by the plaintiff’s counsel that if the defendant
withdrew or undertook to withdraw its counterclaim, the problem of a one-
sided litigation presented by the defendant’s counterclaim would be removed,
and there would be no objection to an order for security on this basis. In fact in
Dumrul, despite the English court noting that the claim and counterclaim
substantially raised the same issues, the court eventually ordered that the
plaintiff provide security for costs on condition that the defendant is prepared
to undertake to consent to the dismissal of the counterclaim in the event of the
plaintiff’s claims being dismissed for failure to put up security (Dumrul at
[72]). The English court, in reaching that decision, held at [20] that in such
situations, a “security for costs order should only be made if the [defendant] is
11

prepared to undertake to consent to the dismissal of the counterclaim in the

event of the Claimant’s claim being dismissed for failure to put up security
(Dumrul at [20]).
30 During the hearing before me, the Defendant’s Counsel adopted this
position and informed me that the Defendant was willing to give an
undertaking to discontinue the counterclaim against the Plaintiff if the
Plaintiff’s claim is struck out for failure to provide security for costs. I think
this would address the prejudice that is highlighted by the Court of Appeal in
SIC at [84]. If the counterclaim against the Plaintiff was discontinued on the
Plaintiff’s claim being struck out for failure to provide security for costs, there
is no danger that the Plaintiff would incur all the costs required to bring that
claim to judgment in the prosecution of his defence of the counterclaim and
still be unable to secure judgment on his claim. In my view, that would be a
reasonable solution to the tension between protecting defendants who face the
likelihood that they will not recover their costs if successful in their defence
and ensuring that a plaintiff will not be placed in a situation where it incurs all
the costs required to prosecute its claim in defending a counterclaim and is
still not able to enter judgment on their claim.
31 The Plaintiff’s Counsel submits that the undertaking does not entirely
negate the prejudice to the Plaintiff if its claim is struck out. He argues that if
the Defendant succeeds in the counterclaim against the other defendants in
counterclaim, those defendants in counterclaim may in turn sue the Plaintiff.
However, I see no merit in this argument because of the following reasons:
(a) first, it is not clear to me on what basis the defendants in

counterclaim would sue the Plaintiff;
12

(b) secondly, the argument made by the Plaintiff’s counsel is

premised on the Defendant succeeding in its counterclaim, any cause
of action that the defendants in counterclaim would have against the
Plaintiff would be independent; and
(c) thirdly, if sued, the Plaintiff may well seek security for its costs
from the defendants in counterclaim.
32 The Plaintiff’s Counsel further submits that the undertaking does not
completely deal with the issue of the overlap because even if the counterclaim
is discontinued against the Plaintiff, the Defendant’s Counsel has stated that
the discontinuation would only be against the Plaintiff and there are other
defendants in the counterclaim. The Plaintiff submits that if the Defendant
proceeds with the counterclaim against the other defendants in counterclaim, it
will be incurring the same set of costs as it would take to advance its defence
as to prosecute the counterclaim so there are no additional costs to be
considered. This deals with the principle stated at [25(a)] above.
33 In JTC, the Court of Appeal held that at [19] that where the defence
and counterclaim are launched from the same platform, the time and work
required for the trial of the counterclaim would be substantially the same.
Costs incurred in defending the action could be regarded as costs necessary to
prosecute the counterclaim. Indeed, granting security in this situation could
amount to indirectly aiding JTC to pursue its counterclaim.
34 However, there are several distinguishing points to note. In JTC, there

was no issue of the plaintiff being impecunious. As noted by the Court of
Appeal at [22], the defendant’s counsel had submitted that the plaintiff was
not impecunious. As such the Court of Appeal did not have the opportunity to
13

consider its decision in the light of the plaintiff being an impecunious

corporation. In such a situation, the English court in Autoweld noted that the
defendant was in a “lose/lose situation”, where if no order for security were to
be made, the defendant may find that in succeeding in its defence, it is at very
serious risk of both not being able to recover any damages that may be
awarded on the counterclaim, and of not recovering its own costs in the
litigation (see Autoweld at [38]). This was further emphasised by the English
Court of Appeal in Autoweld where it held at [59]:
59. A very material factor in this case was the financial

situation of the claimant. The judge accepted, and was entitled
to accept on the material before him, that if the defendant
successfully defended the claim they would be at very serious
risk of not recovering any damages on their counterclaim. The
defendant had not begun the litigation nor was there anything
in this case (in contrast to the The Silver Fir, Petromin, and B J
Crabtree) to lead one to suppose that they were about to do so
when the claimants brought their claim. The risk identified in
the defendant's own submission to Judge Langan QC and
accepted by the judge was a very good reason why they would
not have taken that step. Faced with the reality of a claim,
they responded to the proceedings by pleading the entirety of
the claims which they considered open to them but that does
not, in my judgment, amount on these facts to advancing a
counterclaim with an independent vitality of its own. It must
be borne in mind that the design of the rules is to protect a
defendant (or a claimant placed in a similar position by a
counterclaim) who is forced into litigation at the election of
someone else against adverse costs consequences of that
litigation.
35 I am of the view that while the fact that a Defence substantially

overlaps with a Counterclaim remains a critical factor as held by the Court of
Appeal in JTC, it also needs to be weighed in context of the entire factual
matrix. As the English Court of Appeal in Crabtree held at 49,
… It cannot be too firmly emphasised that there can be no

rule of thumb as to the grant or refusal of an order for security
…
14

This is a point that is also stressed by the Court of Appeal in SIC at [76],
Like in most matters involving the exercise of discretion, the

appropriate decision often rests on a nuanced appreciation of
the factual matrix in the totality of the instant case. …
36 Where a plaintiff is impecunious, the legislative intent and public

policy articulated under s 388 of the Companies Act may weigh more in
favour of ordering security for costs even though there may be a risk that this
could amount to indirectly aiding a defendant in pursuing its counterclaim. It
should be noted that before me there is no evidence that the Defendant
intended to initiate legal proceedings against the Plaintiff until the Plaintiff
brought the present action.
37 Further, where a defendant undertakes to discontinue its counterclaim

if the plaintiff’s claim is struck out for failure to provide security, the prejudice
to the plaintiff is offset by the possibility that there may be no continuing
litigation at all (see Autoweld at [60]).
Delay
38 The Plaintiff also submits that the application was made belatedly and
for past costs. The Plaintiff asserts that the Defendant had failed to apply for
security for costs at the earliest opportunity. However, I do not see how there
has been any delay in the present matter given that the Plaintiff filed its
Statement of Claim (Amendment No 1) on 6 December 2016 and the present
application was filed on 20 January 2017. Further, the Defendant’s Counsel
had written to Plaintiff’s Counsel as early as 23 December 2016 asking if the
Plaintiff would provide security for costs and it was the Plaintiff’s Counsel
who, on 30 December 2016, sought an extension of time to reply within 14
days, and sent a reply only on 6 January 2017, two weeks before the
15

Defendant filed this application. I do not see how there was any delay on the
Defendant’s part in filing this application.
The merits of the claim
39 Next, the Plaintiff submits that security for costs should not be ordered
as the Defence and Counterclaim is weak and unsubstantiated by the
contemporaneous documents available. However, as the Court in Frantonios
held at [46], citing with approval, Kufaan Publishing Limited v Al-Warrak
Publishing Limited 2000 WL 491488 at [33]:
It is equally clear that, in the course of the balancing exercise,

the court will not have regard to the merits of the action in the
sense of the claimant company’s prospects of success unless
there appears to be a high degree of probability in one
direction or the other.
The Court in Frantonios added at [49] that,
… Unless the evidence was so plainly, clearly and

overwhelmingly in favour of the plaintiffs, and unless I could
readily discern from the available evidence before me that the
plaintiffs would have a high degree of probability of succeeding
in their claim against the defendant, then that factor could
properly be weighed in the balance. …
40 Prior to hearing this application I heard Summons Nos 5834 of 2016

and 5931 of 2016, which were the Plaintiff’s applications for summary
judgment and for striking out of the defence respectively. After hearing parties
over the course of what was essentially full day hearings in each application, I
granted unconditional leave to defend and dismiss the striking out application.
The issues raised are complex and involve questions of foreign law. I do not
think that this would be an appropriate case to consider the weakness of the
Defence as a factor.
16

Difficulty in enforcing cost orders against the Plaintiff
41 The Defendant submits that given that the Plaintiff is resident outside
of jurisdiction and in India, this is a factor that favours a grant of security for
costs. This is a point noted in Zhong Da Chemical Development Co Ltd v
Lanco Industries Ltd [2009] 3 SLR(R) 1017 (“Zhong Da”) where the Court
held at [19] that it agreed with the position taken by Professor Jeffrey Pinsler
in his book, Singapore Court Practice 2006 (LexisNexis, 2006) (at p 596), as
follows:
Ideally, the defendant should not be required to experience the

inconvenience and expense of enforcing his judgment in a
different jurisdiction. Nor should his entitlement to costs be
delayed by the process of enforcement and lengthy procedures
which might operate in the foreign jurisdiction. In these
circumstances, the defendant would certainly be in a more
unfavourable position than if the plaintiff had provided the
necessary funds to cover the defendant’s costs. There is also
the risk that enforcement in the foreign forum might be
successfully challenged so that the defendant is not only
deprived of his costs, but incurs additional expense (on the
process for reciprocal enforcement) without gain.
Accordingly, the availability of the process for the enforcement
of judgments in the plaintiff’s jurisdiction – even when there
exists a reciprocal arrangement for the enforcement of
judgments between that jurisdiction and the jurisdiction of the
suit – should never be a conclusive factor against the
provision of security.
For completeness, I note that Professor Pinsler continues to take this position
in the 2017 edition of his book (at pp 1053-1054).
42 The Defendant’s Counsel further highlights that the Plaintiff’s refusal

to recognise the Singapore order giving leave to enforce the Masdar Award
even as a debt is an indicator as to how it will force the Defendant to try and
enforce any costs orders award in Singapore in India. In this respect, I note
that there is no evidence before me that the Plaintiff has any assets within
17

jurisdiction against which the Defendant may enforce any costs orders in its
favour.
43 The Plaintiff argues that India is a Commonwealth country and there is

a reciprocal arrangement for the enforcement of judgments between Singapore
and India. However, it is the fact that the Defendant would be put to cost in
trying to enforce cost orders awarded in Singapore in India, through an
enforcement process that may well outstrip the value of the costs orders, that
favours ordering security for costs. Further, Professor Pinsler highlights in
Singapore Court Practice 2017 (LexisNexis, 2017) (at 1054),
..There is also the risk that enforcement in the foreign forum

might be successfully challenged so that the defendant is not
only deprived of his costs, but incurs additional expense (on
the process for reciprocal enforcement) without gain…
44 I agree with the decision in Zhong Da that the fact that a plaintiff has
no assets within jurisdiction for a successful defendant to try and enforce any
costs orders against is a factor in favour of ordering security for costs not
withstanding that there is a reciprocal agreement between India and Singapore
for the enforcement of orders.
Conclusion
45 Taking into consideration the factors stated above, in particular the fact
that that the Plaintiff is ordinarily resident out of jurisdiction with no assets
within jurisdiction coupled with there being reason to believe that the Plaintiff
will not be able to pay the Defendant’s costs if it is successful in its defence, I
am of the view that it would be just in the present case to order that the
Plaintiff provide security for the Defendant’s costs. This order is made on the
condition that the Defendant gives a written undertaking to discontinue its
18

counterclaim against the Plaintiff if the Plaintiff’s claim is struck out for
failure to provide security, with such condition to apply to any future increase
in security for costs as well.
46 I wish to record my gratitude to both sets of counsel for their assistance

in arriving at this decision.
47 I will hear parties on the quantum of security and the mode such
security will be provided as well as costs.
Paul Tan
Assistant Registrar
Samuel Chacko and Toh Fang Yi (Legis Point LLC) for the Plaintiff;
Calvin Liang and Stephanie Teh (Tan Kok Quan Partnership) for the
Defendant.
19

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IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE

Suit No 1090 of 2016

Siva Industries and Holdings

[Civil Procedure – Security for Costs]

Version No 1: 27 Oct 2020 (22:40 hrs)

IS THE PLAINTIFF IMPECUNIOUS? ........................................................3

SHOULD THE COURT EXERCISE ITS DISCRETION TO ORDER

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Siva Industries and Holdings Ltd

High Court — Suit No 1090 of 2016 (Summons No 301 of 2017)

1 The present application is brought by the Defendant for an order that

2 The Plaintiff is a company incorporated in India. The Defendant is a

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… There is, of course, a difference in the wordings of the two

4 In considering whether the court should order security to be provided

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(b) secondly, whether it is just to order security for costs having

5 There is no dispute that the Plaintiff is ordinarily resident outside of

6 I turn first to the question of whether the Plaintiff is impecunious

Is the Plaintiff impecunious?

7 The Defendant asserts that the Plaintiff is impecunious and relies on

8 The Defendant highlights that the Plaintiff’s auditors have qualified

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(a) They were unable to comment on the completeness of interest

(b) The Plaintiff’s non-current investment in several wholly owned

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10 The second is an arbitral award rendered by a tribunal on 14 October

12 The Plaintiff’s position is that even if its auditors’ qualifications are

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13 I find the Plaintiff’s argument untenable. While the NTT Docomo

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such, I do not think that these unexpired guarantees should be included in

Overlap between the Defence and Counterclaim

18 The Plaintiff argues that the Court of Appeal’s decision in Jurong

19 The Defendant highlights that in situations where the Plaintiff is an

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of the Companies Act lean in favour of the court ordering security to be

20 The Defendant submits that if an impecunious plaintiff was not ordered

21 The Defendant further submits that JTC was distinguishable because

(c) the ordering of security would cause serious burden to the

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22 With respect to the attempts made by the Defendant’s Counsel to

… Here the situation is that, if the money is not paid into

24 The Plaintiff and Defendant’s positions highlight the tension between

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(a) the express recognition that impecunious companies do not

(b) that it is often inappropriate to award security for costs where

25 There are two principles undergirding the factor to be considered at

(a) first, where the defence overlaps substantially with the

(b) secondly, ordering security for costs in such a situation may

26 I propose to deal with the second principle first.

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28 However, while the Court of Appeal remarked that it would normally

29 This is a point that was considered by the English court in Dumrul at

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prepared to undertake to consent to the dismissal of the counterclaim in the

(a) first, it is not clear to me on what basis the defendants in

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(b) secondly, the argument made by the Plaintiff’s counsel is

34 However, there are several distinguishing points to note. In JTC, there