I. Introduction

It is often said that procedure is the handmaid of justice. It guides the process of ushering justice to her final destiny. Procedural fairness is hence an integral part of the court process and lies at the very heart of the Ideals upon which Singapore’s new Rules of Court 2021 were fashioned. Adherence to proper procedure likewise is often critical in litigation. For disputants, it opens some doors but closes others, and ultimately steers the matter toward a just and equitable outcome.

Procedural issues took centre stage in the litigation that culminated in Rex Lam Paki v PNG Sustainable Development Program Ltd [2023] SGHC(A) 24, in which Dentons Rodyk acted for the Respondent, PNG Sustainable Development Program Ltd (PNGSDP). The procedures under the former Rules of Court 2014 enabled PNGSDP to swiftly obtain a judgment on the merits for about AUD 7 million on behalf of PNGSDP in the face of the Appellant’s absence when the matter came up for hearing at first instance before the General Division of the High Court (the GD), and simultaneously prevented the Appellant from abusing the court process. It blocked a procedural course that he had established for himself and which ultimately ended in an unsuccessful appeal before the Appellate Division of the High Court (the AD) to invoke the court’s inherent powers.

II. Background

In short, this case concerned the Appellant’s unsuccessful attempts to set aside a judgment obtained against him in his absence.

In 2018, PNGSDP commenced an action vide HC/S 865/2018 against the Appellant, its former director and 5 other defendants in relation to the sale of a subsidiary in 2014 known as Cloudy Bay Sustainable Forestry Ltd (Cloudy Bay), in which the Appellant was also a director. PNGDSP claimed that the Appellant had breached his fiduciary duties in relation to the sale.

Following an unsuccessful attempt by the Appellant to set aside service of the writ out of jurisdiction, the Appellant was directed to file his Defence but did not do so. It was potentially open to a party in a similar position to PNGSDP to seek a judgment in default. Ultimately, as the Rules of Court also catered for the possibility that PNGSDP could instead seek a judgment on the merits (and the court was also hesitant to grant a judgment in default), this was the course that PNGSDP eventually pursued. A judgment on the merits generally carries some advantages over a default judgment.

As the Appellant’s failure to file a Defence meant that there had been a deemed admission of the allegations of fact in PNGSDP’s Statement of Claim, PNGSDP applied for judgment on admissions of fact against the Appellant under Order 27 Rule 3 of the Rules of Court 2014 (the 2014 Rules). A judgment on admissions of fact would be a judgment on the merits in that there would have to be an adjudication of the merits before judgment would be granted.

The Appellant failed to attend the hearing of PNGSDP’s application for judgment on admissions of fact, whether in person or by solicitors. PNGSDP demonstrated that it was entitled to the judgment it sought on the basis of the deemed admissions in the matter. Judgment was accordingly entered against the Appellant and two other defendants for the sum of approximately AUD 7 million on 4 March 2020 (the Judgment).

The Appellant did not appeal against the Judgment. Instead, some 17 months after Judgment was entered, the Appellant filed an application to the GD vide HC/SUM 3731/2021 (SUM 3731) to set aside the Judgment.

SUM 3731 was dismissed by the GD on 1 November 2021: PNG Sustainable Development Program Ltd v Rex Lam Paki and others [2022] SGHC 188. In this regard, the GD held that Mr Paki had not only “adopted the wrong procedure to dissolve the Judgment, he has also proceeded before the wrong court”. The procedural roadblock was itself sufficient to end the matter. In any event, the GD held that it did not have an inherent power to set aside the Judgment, as such a power was excluded by the architecture of the 2014 Rules, and that even if such a power existed, there was no good reason to invoke it in the circumstances, as the Appellant had “made a deliberate and considered decision…to let the Judgment stand without challenging it on appeal in order to take his chances resisting enforcement”. Accordingly, the GD considered that SUM 3731 was an abuse of the court process.

The Appellant then appealed against the dismissal of SUM 3731 to the AD.

III. Decision of the Appellate Division of the High Court

On appeal, the AD upheld the GD’s decision to dismiss SUM 3731. The AD affirmed that as a starting point, it was not sufficient for the Appellant to show that he had merits in his intended defence. Rather, the court had to consider the Appellant’s explanation (if any) for his defaults and delay, and whether there was any prejudice to PNGSDP.

In this regard, the AD found that the Appellant had no good reasons for his numerous defaults and lengthy delay leading up to the Judgment. In particular:

1. The Appellant had no good reason for failing to file his Defence.
2. The Appellant was absent from the hearing of PNGSDP’s application for judgment on admissions of fact. The Appellant had contended that he was absent and unable to engage solicitors because of his impecuniosity, but these reasons were rejected by the AD, which affirmed the GD’s finding that there was no evidence of any such impecuniosity. In any event, the Appellant could have acted in person or could have sought an adjournment.
3. The Appellant did nothing in relation to the Judgment for 17 months. Instead, he only applied to set aside the Judgment vide SUM 3731 after PNGSDP had registered and enforced the Judgment against him abroad.
4. The Appellant invoked the wrong procedure by applying to set aside the Judgment when he could have filed an appeal. Accordingly, the AD found that SUM 3731 was “no more than a back-door appeal that the court could not condone”.

The AD accordingly dismissed the appeal and awarded costs of $35,000 to PNGSDP.

In coming to its decision, the AD held that it had the inherent power to set aside a judgment on admissions of fact under the 2014 Rules, but that the present case did not warrant the court’s exercise of that power. The Court of Appeal had previously in Harmonious Coretrades Pte Ltd v United Integrated Services Pte Ltd [2020] 1 SLR 206 widely circumscribed the court’s inherent power to set aside judgments or orders to prevent injustice, including judgments or orders obtained irregularly, fraudulently or in default of appearance of a party. This would be consistent with Order 92 Rule 4 of the 2014 Rules, which recognises the court’s inherent power to “make any order as may be necessary to prevent injustice” (emphasis added). The AD considered that the court retained a residual discretion, flowing from its inherent power, to set aside judgments or orders to prevent injustice, even though the 2014 Rules did not expressly provide such a power, and even where an appeal was the proper recourse, as in the present case. The AD also affirmed that whether there was a right of appeal, and if so, why an appeal was not pursued, were all relevant considerations in deciding whether it was necessary to invoke the court’s inherent power to prevent injustice. Ultimately, the AD agreed with the GD that the Judgment should not be set aside, given the Appellant’s lack of a good reason for his defaults and lengthy delay.

IV. Commentary

Both the GD’s and AD’s decisions amply demonstrate the fundamental role played by the procedural framework in the administration of justice. That framework was designed to strike the appropriate balance between various interests in civil litigation, including the competing substantive interests of the parties, and the interest of finality in litigation against parties’ right to be heard. The present Rules of Court 2021 (2021 Rules) continues to preserve this delicate balance, but now also includes the Ideals and other provisions which provide clearer guidance on how this balance should be calibrated by the courts.

One main issue that came to the fore in the present case was the appropriate procedure to challenge a judgment obtained in the absence of a party. The related question was what the test would be in determining whether the Judgment in question ought to be set aside.

At first instance, the Appellant argued that the court had the power to set aside the Judgment under Order 32 Rule 6 of the 2014 Rules, which provides for ex parte orders to be set aside, or alternatively, under its inherent powers as preserved by Order 92 Rule 4. The Appellant further argued that the predominant consideration for setting aside the Judgment was whether he had a defence on the merits, as opposed to the reason(s) for his absence. In so doing, the Appellant equated a judgment on admissions of fact with a judgment in default of defence, as both judgments are entered without a trial.

The GD rejected the Appellant’s submission that the court had the power to set aside the Judgment under Order 32 Rule 6. The Judgment was made inter partes by PNGSDP under Order 27 Rule 3, and was not rendered an ex parte order simply because of the Appellant’s absence at the hearing. The GD also held that it had no inherent power to set aside the Judgment as the 2014 Rules did not provide for such a power. Thus the proper recourse was for the Appellant to appeal against the Judgment.

Even assuming that it had the inherent power to set aside the Judgment, the GD considered that greater weight should be accorded to the reasons for the Appellant’s delay, default or absence, as opposed to whether he had a defence on the merits. This principle was drawn from the line of cases in Su Sh-Hysu v Wee Yue Chew [2007] 3 SLR(R) 673 and First Property Holdings Pte Ltd v U Myo Nyunt (alias Michael Nyunt) [2020] SGHC 276 (upheld by the Court of Appeal in U Myo Nyunt (alias Michael Nyunt) v First Property Holdings Pte Ltd [2021] 2 SLR 816). The GD held that the true dividing line was between judgments entered purely by reason of a procedural default, where the defendant had no opportunity to be heard on the merits, and judgments entered after the defendant had an opportunity to be heard of the merits (regardless whether he took advantage of that opportunity or not). As the present case fell within the latter category, the GD dismissed SUM 3731 because the Appellant had failed to satisfy the court on the sufficiency of his reasons for his absence at the hearing of PNGSDP’s application for the Judgment, and his delay in applying to set aside the Judgment. The GD also found that SUM 3731 was an abuse of process.

On appeal, the Appellant abandoned his reliance on Order 32 Rule 6 of the 2014 Rules, and conceded that the proper route was not to challenge the Judgment by way of a setting aside application. He however maintained that the court had the inherent power to set aside a final judgment where the justice of the case required it, as was the occasion presently. This was the first time that this issue arose before the AD. As explained, the AD dismissed the appeal for the reasons set out in Section III above.

The GD’s and AD’s decisions together reaffirm the correct view at least under the 2014 Rules as to when an appeal ought to be brought, as opposed to an application to set aside a judgment or order. The AD’s decision also provides welcomed clarity on the scope of the court’s inherent powers, that its exercise is to be guided by the predominant consideration of preventing injustice. This is not only consistent with the Court of Appeal’s decision in Harmonious Coretrades, but also reaffirms the principles set out in other authorities before the Court of Appeal (see Roberto Building Material Pte Ltd v Oversea-Chinese Banking Corp Ltd and another [2003] 2 SLR(R) 353 and Wellmix Organics (International) Pte Ltd v Lau Yu Man [2006] 2 SLR(R) 117) that the court’s inherent powers should only be invoked in special circumstances and according to the touchstone of need.

It is also significant that although the AD’s decision was rendered under the framework of the 2014 Rules, its ruling on the court’s inherent powers dovetails with Order 3 Rule 2 of the 2021 Rules. In particular, Order 3 Rule 2(8) of the 2021 Rules provides that “if it is in the interests of justice”, the court may “revoke any judgment or order obtained or set aside anything which was done (a) without notice to, or in the absence of, the party affected; (b) without complying with these Rules or any order of Court; (c) contrary to any written law; or (d) by fraud or misrepresentation.” Order 3 Rule 2(2) further provides that “[w]here there is no express provision in these Rules or any other written law on any matter, the Court may do whatever the Court considers necessary on the facts of the case before it to ensure that justice is done or to prevent an abuse of the process of the Court, so long as it is not prohibited by law and is consistent with the Ideals.”

Notwithstanding the broad scope of the court’s inherent powers to set aside judgments and orders to prevent injustice, the AD’s decision affirms that such powers will be exercised judiciously. In particular, the court will closely scrutinise the conduct of the party applying for setting aside and will not countenance any abuse of process, including the wrongful invocation of the court’s inherent powers for a back-door appeal as the Appellant in this case sought to do.

Overall, the procedural framework in this matter had sufficient flexibility to enable PNGSDP to obtain a judgment on the merits when the Appellant failed to file his Defence when it was due. It also provided recourse for a person in the Appellant’s shoes, to challenge such a judgment. This was so even when the Appellant did not attend the hearing in which the Judgment was made, with the court continuing to be vested with a residual inherent jurisdiction to prevent injustice should the need arise.

This decision ultimately serves as an instructive example of the integrated balance between procedural justice and substantive justice that lies at the heart of all litigation. In this instance, the Appellant sought to invoke the court’s inherent powers to set aside the Judgment on the basis that he had an alleged defence on the merits, notwithstanding all of his numerous defaults and delays in the proceedings leading to the Judgment.

In declining to set aside the Judgment, the AD rightly found that there was no injustice to warrant a setting aside. Indeed, if the Judgment were set aside, that would be akin to allowing a back-door appeal or an opportunistic attempt by the Appellant to re-litigate the merits of the case, which would be prejudicial to PNGSDP. The twin aims of procedural and substantive justice were therefore achieved by the GD’s and the AD’s unified decision to refrain from exercising the court’s inherent powers.

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The Dentons Rodyk Team in Rex Lam Paki v PNG Sustainable Development Program Ltd [2023] SGHC(A) 24 was led by Senior Partner Mark Seah, and included Partner Martin See, Senior Associate Alexander Choo, and Associate Philip Teh. This victory for PNGSDP is the latest in a series of wins by Dentons Rodyk as reported in [2023] 1 SLR 166, [2021] SGHC 205 and [2020] 2 SLR 200 (among others).