SETTING ASIDE DEFAULT JUDGMENT DUE TO FAILURE TO ATTACH NOTICE OF INTENTION TO CONTEST / NOT TO CONTEST TO ORIGINATING CLAIM
In Management Corporation Strata Title Plan No 4572 v Kingsford Development Pte Ltd and others [2023] SGHCR 8, AR Desmond Chong had the opportunity to consider the nature and extent of procedural breach required to render a default judgment to be “irregularly” obtained per the test for irregularity in Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] 4 SLR(R) 907 (“Mercurine”). This was in the context of the claimant’s failure to attach a notice of intention to contest or not contest to the originating claim when it was served on the defendant.
This was an application by the fourth defendant, ADF Waterproof Pte Ltd (“D4”), to set aside a judgment (“Default Judgment”) entered in the claimant’s (“C”) favour “due to D4’s failure to file a notice of intention to contest or not contest the originating claim within the stipulated deadline under the Rules of Court 2021 (“ROC 2021”).” (at [1])
While the requirement to file a notice of intention to contest or not contest under ROC 2021 was equivalent to the requirement under the revoked Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC 2014”) for a defendant to enter an appearance (at [1]), there was a new requirement present in ROC 2021 that was not present in the ROC 2014 (at [35]).
Form 8. Per O 6 r 5(1) of the ROC 2021, “[a]n originating claim must be in Form 8” of the Supreme Court Practice Directions 2021 (“Practice Directions”) (at [24]).
A note in Form 8 then provides that “A notice of intention to contest or not contest an originating claim in Form 10 is to be attached to this originating claim when it is served.” (at [24])
This is a new requirement that was not present in the ROC 2014 (at [35]).
Form 10. Form 10 of the Practice Directions prescribes the standard form for a notice of intention to contest or not contest (at [25]).
In the present case, Form 10 was not attached to the originating claim when it was served on D4 (at [25]).
D4 therefore submitted that the Default Judgment was irregularly obtained (at [25]).
C, however, argued that it did not breach O 6 r 5(1), because the requirement to attach the notice per the note in Form 8 “was not a requirement under the ROC 2021” (at [27]).
Affidavit. There was a related issue on whether D4 had to state on affidavit that it was seeking to set aside the Default Judgment on the basis that it was irregularly obtained, and whether what D4 highlighted in its affidavit was sufficient (at [27] – [31]).
In short, the Court found that a defendant had “to specify whether it is applying to set aside a default judgment on the basis that it was regularly or irregularly obtained, and, if the latter, the specific procedural breaches being relied upon by the defendant.” (at [30])
Nonetheless, the Court was satisfied that D4 did “minimally highlight” grounds for setting aside the Default Judgment, and the Court proceeded to consider the issue of whether the Default Judgment was irregularly obtained (at [31]).
Irregular Default Judgment. The High Court found that “there was procedural non-compliance by C which rendered the Default Judgment to have been irregularly obtained” (at [32]) under the first stage of the analysis in Mercurine (at [33]).
Whether O 6 r 5(1) was breached. In addressing whether there was procedural non-compliance, the Court identified two issues (at [34] – [35]):
1. Whether “O 6 r 5(1) was relevant to the entry of the Default Judgment, such that the alleged breach of O 6 r 5(1) may constitute an irregularity”; and
2. Whether O 6 r 5(1) was breached on the facts of the case.
The Court found that O 6 r 5(1) was relevant as O 6 r 5(1) is a rule on the form which an originating claim must take, and a default judgment can only be entered following service of an originating claim (at [34]).
As for the second issue, the High Court was of the view that the nature and extent of procedural breach would be relevant. See [36] – [37] as excerpted below:
“36 … in this case, the nature and extent of procedural breach required to render the Default Judgment to be irregularly obtained was less straightforward. This was because O 6 r 5(1) of the ROC 2021 required the originating claim to be “in Form 8”, but it was unclear when an originating claim could be said to not be “in Form 8”. For instance, would a minor typographical error in the originating claim that deviated from Form 8, or a failure to include a few paragraphs from Form 8 in the originating claim, constitute breaches of O 6 r 5(1)?
37 When considering if an originating claim is “in Form 8”, it is important to consider what Form 8 requires, and the purpose behind those requirements under Form 8. … ”
(emphasis in original by Court)
As to the purpose of Form 8, the High Court stated as follows (at [38]):
“38 It is clear from the foregoing that the core objective and substance of Form 8 – and, in turn, O 6 r 5(1) of the ROC 2021 – is to:
(a) give the defendant notice that the claimant has commenced an action against the defendant (see paragraphs 1 and 2 of Form 8, and paragraph 3 of the Note in Form 8);
(b) set out the key steps that the defendant has to take to contest the claim (such as the timelines to file a notice of intention to contest or not contest and a defence) (see paragraphs 3 and 6 of Form 8); and
(c) set out the consequences of a failure to take those steps (that is, that the court may give judgment to the claimant) (see paragraphs 4 and 5 of Form 8).”
Hence, the purpose of Form 8 was important because “[n]ot every deviation from the requirements of Form 8 may cause an originating claim to be so defective as to amount to a breach of O 6 r 5(1)” (at [39]). The Court illustrated this by considering four different hypotheticals at [39] – [41], and opined that, e.g., minor typographical or editorial errors may not constitute a procedural breach of O 6 r 5(1) that would amount to an irregularity.
Failure to attach Form 10 to the originating claim. Turning to the facts on hand, it was undisputed that C failed to attach a notice of intention to contest or not contest in Form 10 to the originating claim when it was served on D4 (at [42]).
While Form 8 refers to a notice of intention to contest or not contest (at [42]), the Court noted that Form 8 itself does not explain what a notice of intention to contest or not contest is (at [43]).
Given the purpose of O 6 r 5(1) as identified by the Court earlier at [38(b)], the Court found that “the reason why Form 8 requires Form 10 to be attached to the originating claim is so that (a) the terms of the attached Form 10 would show the defendant what a notice of intention to contest or not contest is, and (b) allow the defendant to be able to make copies of the notice of intention to contest or not contest to file and serve the latter within time, even without assistance from a lawyer.” (at [44]; emphasis in original by Court)
As such, the High Court held that “C’s failure to attach the notice of intention to contest or not contest to the originating claim when it was served on D4 was not a minor editorial error… C’s procedural breach caused the originating claim that was served on D4 to be sufficiently defective that it undermined one of the main purposes of Form 8 – and, in turn, O 6 r 5(1) – highlighted at [38(b)] above, which was that the originating claim served on D4 had to clearly set out the key steps that D4 had to do to contest the claim.” (at [45]; emphasis in original by Court)
Therefore, C, by its failure to attach a notice of intention to contest or not contest, “had not complied with the requirement under O 6 r 5(1) of the ROC 2021 for the originating claim to be in Form 8”, and the Default Judgment was irregularly obtained (at [46]; emphasis in original by Court).
Result. As the Default Judgment was irregularly obtained, the Court proceeded to determine whether the Default Judgment should be set aside at [56] – [73].
At the end of the day, the Court set aside the Default Judgment on the basis that D4 was able to demonstrate a defence that was “not bound to lose”, though D4 was ordered to provide security of $80,000.00 by way of solicitor’s undertaking as D4 was “unable to affirmatively or clearly state its defence relating to the existence of the defects and its liability on affidavit” and hence a demonstration of commitment on the part of D4 was called for (see [73] – [76]).
Significance. It is important to comply punctiliously with the Rules of Court, including the Practice Directions. As the Court noted at [47], per O 3 r 2(4) of the ROC 2021, any non-compliance with the Practice Directions can amount to a procedural irregularity, though the Court caveated that this would require a “fact-sensitive analysis on a case-by-case basis.”
As illustrated by this case, the failure to attach the notice of intention to contest or not contest to the originating claim by C meant that the Default Judgment was irregularly obtained. Of course, while this does not mean that such an irregularly obtained default judgment will always be set aside, nonetheless, parties to a litigation should take care to adhere to the rules.
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