ENFORCEMENT ORDER UNDER ORDER 22 OF THE RULES OF COURT 2021
This week’s blog covers Art Ask Agency SL v Person(s) Unknown (“LXS-WL STORE”) and others [2023] SGHCR 14, an interesting decision on an enforcement order under Order 22 of the Rules of Court 2021.
Facts. The claimant, a Spanish company, sought to attach debts from a non-party in relation to more than 200 defendants who are “unknown entities who operate or operated e-commerce stores on the AliExpress online or e-commerce platform (“E-Market”)” through their accounts with the non-party, Alipay Merchant Services Pte Ltd (“AMS”) (at [1] – [2]; [5]).
There were a few issues before the Court (at [15]).
“(a) Issue (1): whether AMS must pay the Security Deposits to the enforcement applicant;
(b) Issue (2): whether AMS must pay the IP Amounts to the enforcement applicant;
(c) Issue (3): whether AMS is entitled to costs of S$100 from each attached debt before making payment to the enforcement applicant, or whether AMS is only entitled to a single deduction of S$100 in costs in respect of all the sums attached;
(d) Issue (4): whether EO 14 attaches only to debts as at the date of service of the NOA, or whether it continues to attach all debts that may accrue in the AMS accounts until 10 February 2024 (or such time as its validity may be extended).”
This blog will briefly cover the first three issues.
Objections. AMS objected to paying over to the enforcement applicant (at [11(b)]; [12(a)]):
The sums restrained as a security deposit in the AMS account for the benefit of the E-Market (“Security Deposits”); and
The sums restrained upon AMS’ receipt of complaints and supporting materials from third parties who had alleged intellectual property infringement against the enforcement respondent (“IP Amounts”).
The Court noted that O 22 r 10(1) read with O 22 r 10(2) of the Rules of Court 2021 (at [16]):
“… expressly requires the objector to file and serve a notice of objection which must “specify the property or debt in dispute, state the grounds of objection and include any evidence supporting the grounds of objection” [emphasis added].”
Therefore, “the onus was on AMS, as the objector, to provide sufficient basis for the grounds of its objection” (at [17]). However, as set out at [18], “AMS wished this Court to accept that AMS had actually (which was a point of fact) and legitimately (which was a point of law) restrained certain amounts in the AMS accounts as Security Deposits.” (emphasis in original)
This was because AMS simply referred to various clauses of the publicly available Terms and Conditions (“T&Cs”) and supplementary T&Cs (“Supplementary T&Cs”) governing the AMS accounts, without stating or evidencing acceptance of the Supplementary T&Cs by the particular enforcement respondents nor providing evidence that the amounts were restrained pursuant to Security Deposits service (at [19] – [24]). The Court found this to be “clearly inadequate” (at [24]).
The Court concluded that “Only AMS would know the full facts and details, and have the necessary supporting documents, to prove …” that the contractual clauses were met in the restraint of the Security Deposits and IP Amounts (at [26] and [30]). But this was something which AMS did not prove.
ROC 2014. In addition, the Court noted that what AMS had to show under the new rules was essentially the same as that required at the show cause stage of a garnishee proceeding under the old rules. See [32] – [33]:
“32 What was required of AMS under SUM 1409 was no more than what would have been required at the show cause stage of a garnishee proceeding under Order 49 of the revoked Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC 2014”). AMS did not show cause to my satisfaction. In its supporting affidavit, apart from explaining its position about the Security Deposits and the IP Amounts, AMS did not dispute that the sums in the enforcement respondents’ AMS accounts were attachable for the benefit of the enforcement applicant except for the Security Deposits and the IP Amounts. This put paid to AMS’ argument at the oral hearing of SUM 1409 that the enforcement applicant had not crossed the threshold of proving the existence of debts available for attachment.
33 It was also no answer for AMS to argue that the Security Deposits and the IP Amounts could not be accessed by the enforcement respondents and to urge upon me that because the enforcement applicant cannot be in a better position than the enforcement respondents, the Security Deposits and the IP Amounts could not be attached for the benefit of the enforcement applicant. Such arguments presupposed that AMS had satisfied me that the Security Deposits and the IP Amounts had, as a matter of fact, been actually set aside and had, as a matter of law, been legitimately set aside. For reasons I have explained, this presupposition is invalid at present.”
Costs to non-party. On the third issue of AMS’ entitlement to costs, the enforcement applicant tried to argue that AMS was only entitled to costs of S$100 in respect of the entire Notice of Attachment (“NOA”), and not for each attached debt under the NOA (at [35]).
However, the Court did not accept these arguments based on the wording of the relevant rules (at [39]). In particular, O 22 r 6(8) of the Rules of Court 2021 stated that (at [39]):
“… the non-party may deduct that amount from the debt owing from the non-party to the enforcement respondent which is attached under the notice of attachment prior to handing or paying over the sums mentioned in paragraph (10) [emphasis added].”
Therefore, “the latter part of Order 22 r 6(8) of the Rules of Court 2021 speaks to the point that the non-party’s costs of S$100 are pegged to the attached debt rather than to the NOA.” (at [39])
The enforcement applicant then argued, in gist, that the work done by the non-party did not justify such amount to be paid (at [42]). However, the Court found that this enquiry was not “necessary or instructive” because the stipulated S$100 was “a flat amount that did not require the Court to assess whether the non-party ‘deserved’ that sum or not.” (at [44])
ROC 2014. The Court noted that this was “not dissimilar to the approach which was taken under the ROC 2014”, where the sole distinction on costs depended on whether the garnishee had filed an affidavit, but not whether it was a “voluminous” or “one-page” affidavit (at [45]).
Significance. This is an interesting decision because the Court sheds light on how certain provisions under Order 22 of the Rules of Court 2021 apply with reference to the established principles of the garnishee proceedings under the ROC 2014, such as, for example, in relation to the show cause stage, or the non-party’s entitlement to costs.
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