Frantonios Marine v Kay Swee Tuan: Security for Costs & Companies Act Dispute
In Frantonios Marine Services Pte Ltd and Another v Kay Swee Tuan, the Singapore High Court heard an appeal against the Senior Assistant Registrar's decision ordering the 1st plaintiff, Frantonios Marine Services Pte Ltd, to provide security for the defendant's costs. The court, presided over by Chan Seng Onn J, dismissed the appeal with modifications, finding that the conditions under Section 388 of the Companies Act were met and that it was just to order security for costs, albeit in a two-stage approach to allow for a potential summary judgment application.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal dismissed with modifications; the 1st plaintiff was ordered to provide security for costs.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal regarding security for costs. The court considered factors for awarding security for costs under Section 388 of the Companies Act.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Frantonios Marine Services Pte Ltd | Plaintiff, Appellant | Corporation | Security for costs ordered | Partial | Rasanathan s/o Sothynathan |
| Chew Tee Tu | Plaintiff, Appellant | Individual | Neutral | Neutral | Rasanathan s/o Sothynathan |
| Kay Swee Tuan | Defendant, Respondent | Individual | Appeal dismissed with modifications | Won | Chandran Mohan, Khoo Yuh Huey |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Seng Onn | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Rasanathan s/o Sothynathan | Colin Ng & Partners LLP |
| Chandran Mohan | Rajah & Tann LLP |
| Khoo Yuh Huey | Rajah & Tann LLP |
4. Facts
- The 1st plaintiff was ordered to provide security of $100,000 for the defendant’s costs.
- The 1st plaintiff's main business was the provision of marine services.
- The 2nd plaintiff was a director and shareholder of the 1st plaintiff.
- The defendant was a director of Marine and Environmental Services Pte Ltd.
- The defendant became the sole signatory of the 1st plaintiff’s bank accounts in June 2003.
- The plaintiffs claimed the defendant wrongfully withdrew $2,526,546.77 from the 1st plaintiff’s bank account.
- The plaintiffs claimed the defendant wrongfully withdrew S$438,606.95 from the 1st plaintiff’s bank account.
5. Formal Citations
- Frantonios Marine Services Pte Ltd and Another v Kay Swee Tuan, Suit 235/2006, RA 285/2007, [2008] SGHC 91
6. Timeline
| Date | Event |
|---|---|
| Frantonios Marine Services Pte Ltd incorporated in Singapore. | |
| Frantonios Marine Services Pte Ltd granted banking facilities by Chang Hwa Commercial Bank Ltd. | |
| Defendant proposed collaboration to K.C. Tan. | |
| Defendant offered financial assistance to K.C. Tan. | |
| Acknowledgement of loan signed by K.C. Tan and the 2nd plaintiff. | |
| Judgment in default obtained against K.C. Tan and the 2nd plaintiff. | |
| Defendant became the sole signatory of the 1st plaintiff’s bank accounts. | |
| 1st plaintiff's board of directors passed resolutions for RHB account opening. | |
| 1st plaintiff's board of directors passed resolutions to appoint the defendant as adviser. | |
| Defendant became the sole signatory of the 1st plaintiff’s Chang Hwa Bank account. | |
| K.C. Tan was made a bankrupt. | |
| SCB account opened. | |
| Defendant closed the 1st plaintiff’s accounts with RHB Bank Berhad. | |
| Pandan Loop office re-possessed by UOB Ltd. | |
| Defendant closed the 1st plaintiff’s accounts with Standard Chartered Bank. | |
| Property at 1A Bright Hill Crescent Singapore was re-possessed and sold off by Chang Hwa Bank. | |
| Suit 235/2006 filed. | |
| Company asset search on the 1st plaintiff. | |
| RA 285/2007 filed. | |
| Eltici Financial Advisory Services Pte Ltd report dated. | |
| M/s Tan Cheng Lin & Co prepared an expert report. | |
| Decision Date. |
7. Legal Issues
- Security for Costs
- Outcome: The court ordered the 1st plaintiff to provide security for costs, finding that the conditions under Section 388 of the Companies Act were met.
- Category: Procedural
- Sub-Issues:
- Inability to pay costs
- Oppressive application of security
- Want of means brought about by defendant
8. Remedies Sought
- Account of all monies withdrawn
- Payment of all monies due
- Damages for conversion
9. Cause of Actions
- Misappropriation of funds
- Negligence
- Breach of fiduciary duty
10. Practice Areas
- Commercial Litigation
11. Industries
- Marine Services
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Creative Elegance (M) Sdn Bhd v Puay Kim Seng & Anor | Court of Appeal | Yes | [1999] 1 SLR 600 | Singapore | Cited for the principle that the making of an order for security for costs under s 388 was a matter of discretion and in exercising its discretion the court would have regard to all the relevant circumstances and would have to consider whether it would be just to make the order. |
| Aquila Design [GRP Products] Ltd v Cornhill Insurance plc | N/A | Yes | [1988] BCLC 134 | N/A | Cited regarding the burden on a plaintiff in liquidation to provide security, potentially leading to abandonment of the action due to impecuniosity. |
| Kufaan Publishing Limited v Al-Warrak Publishing Limited | N/A | Yes | (2000) WL 491488 | England | Cited for the principle that the court will not have regard to the merits of the action unless there appears to be a high degree of probability in one direction or the other. |
| Porzelack KG v Porzelack (UK) Ltd | N/A | Yes | [1987] 1 WLR 420 | N/A | Cited for the principle that a detailed examination of the possibilities of success or failure merely blows the case up into a large interlocutory hearing involving great expenditure of both money and time. |
| Trident International Freight Services v Manchester Ship Canal Co | N/A | Yes | (1990) BCLC 263 | N/A | Cited for the principle that interlocutory proceedings should not be allowed to develop into full-scale but prematurely litigated trials. |
| Pearson & Anor v Naydler & Ors | N/A | Yes | [1977] 3 All ER 531 | N/A | Cited for the principle that the inability of the plaintiff company to pay the defendants’ costs is a matter which not only opens the jurisdiction but also provides a substantial factor in the decision whether to exercise it. |
| Ho Wing On Christopher and Others v ECRC Land Pte Ltd (in liquidation) | Court of Appeal | Yes | [2006] 4 SLR 817 | Singapore | Cited for the principle that impecunious companies do not have an unfettered freedom to commence legal actions against defendants who cannot be compensated in costs if they win. |
| National Bank of New Zealand Ltd v Donald Export Trading Ltd | New Zealand Court of Appeal | Yes | [1980] 1 NZLR 97 | New Zealand | Cited for the principle that the legislation allows security to be given in circumstances where the company appears to be in no position to provide it from its own resources. |
| Sir Lindsay Parkinson & Co Ltd v Triplan Ltd | N/A | Yes | [1973] 2 All ER 273 | N/A | Cited regarding the view that security ought to be ordered unless there are special circumstances which justify its refusal. |
13. Applicable Rules
| Rule Name |
|---|
| Order 14 of the Rules of Court (Cap 322, R5, 2006 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Section 388 Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Security for costs
- Companies Act
- Impecunious plaintiff
- Misappropriation
- Beneficial interests
- Banking facilities
- Tank cleaning jobs
- Expert report
- Sole signatory
- Financial difficulties
15.2 Keywords
- security for costs
- companies act
- marine services
- misappropriation
- singapore
- high court
16. Subjects
- Civil Procedure
- Company Law
- Costs
17. Areas of Law
- Civil Procedure
- Companies Act
- Security for Costs