SW Trustees v. Tesemma: Security for Costs Application in Liquidation

SW Trustees Private Limited (in compulsory liquidation) and Farooq Ahmad Mann, the plaintiffs, sued Teodros Ashenafi Tesemma and others in the General Division of the High Court of Singapore. The first defendant, Teodros Ashenafi Tesemma, appealed against the Assistant Registrar's decision to dismiss his application for security for costs. The court allowed the appeal in part, finding that security for costs should be ordered for trial and post-trial work, but not for pre-trial work, given the delay in the application.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Appeal allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding security for costs application. The court allowed the appeal in part, ordering security for trial and post-trial costs.

1.7 Decision Date

30 May 2023

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
SW Trustees Private Limited (In Compulsory Liquidation)	Plaintiff	Corporation	Appeal allowed in part	Partial	Salem bin Mohamed Ibrahim, Yap Zhan Ming, Kimberly Ng Qi Yuet, Kong Hui Xin Annette
Farooq Ahmad Mann	Plaintiff	Individual	Appeal allowed in part	Partial	Salem bin Mohamed Ibrahim, Yap Zhan Ming, Kimberly Ng Qi Yuet, Kong Hui Xin Annette
Teodros Ashenafi Tesemma	Defendant, Third Party, Appellant	Individual	Appeal allowed in part	Partial	Mohammed Reza s/o Mohammed Riaz, Nigel Desmond Pereira, Darren Low Jun Jie, Ariane Kea Tong
Cheng Ka Wai	Defendant	Individual	Neutral	Neutral
Chooi Kok Yaw	Defendant	Individual	Neutral	Neutral
Alexander Ressos	Defendant	Individual	Neutral	Neutral
Sino Africa Trading Limited	Defendant	Corporation	Neutral	Neutral
Coca-Cola Sabco (East Africa) Limited	Defendant	Corporation	Neutral	Neutral

3. Judges

Judge Name	Title	Delivered Judgment
Goh Yihan	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Salem bin Mohamed Ibrahim	Salem Ibrahim LLC
Yap Zhan Ming	Salem Ibrahim LLC
Kimberly Ng Qi Yuet	Salem Ibrahim LLC
Kong Hui Xin Annette	Salem Ibrahim LLC
Mohammed Reza s/o Mohammed Riaz	JWS Asia Law Corporation
Nigel Desmond Pereira	JWS Asia Law Corporation
Darren Low Jun Jie	JWS Asia Law Corporation
Ariane Kea Tong	JWS Asia Law Corporation
Tong Siu Hong Joshua	Kalco Law LLC
Tan Yan Ru	Kalco Law LLC

4. Facts

SW Trustees Private Limited is in compulsory liquidation.
Farooq Ahmad Mann is the liquidator of SW Trustees Private Limited.
Plaintiffs commenced Suit 229 against the defendants.
The first defendant applied for security for costs.
The first plaintiff was put into insolvent liquidation on 21 June 2019.
The second plaintiff was granted authorisation to enter into a funding agreement with the SGI Creditors.
The first defendant’s application for security for costs was filed only on 28 February 2023.

5. Formal Citations

SW Trustees Pte Ltd (in compulsory liquidation) and anothervTeodros Ashenafi Tesemma and others, Suit No 229 of 2021, [2023] SGHC 160

6. Timeline

Date	Event
2017-07-21	Arbitration award obtained by SGI SWE Limited and Schulze Global Investments Holdings LLC
2019-06-21	First plaintiff put into insolvent liquidation
2021-03-01	Plaintiffs commenced Suit 229
2021-10-01	General discovery completed
2022-08-01	Parties in the stage of specific discovery
2023-02-28	First defendant’s application for security for costs filed
2023-04-12	Plaintiffs informed the Registry that they intended to amend their Statement of Claim
2023-04-24	First defendant filed his Notice of Appeal against the learned AR’s decision
2023-05-08	Hearing date
2023-05-31	Judgment reserved

7. Legal Issues

Security for Costs
- Outcome: The court allowed the appeal in part, ordering security for trial and post-trial costs but not for pre-trial costs due to delay.
- Category: Procedural
- Sub-Issues:
  - Delay in application for security for costs
  - Prejudice to plaintiff
  - Stifling of claim

8. Remedies Sought

Security for costs

9. Cause of Actions

Conspiracy to wrongfully cause the first plaintiff’s assets to be sold at an undervalue

10. Practice Areas

Commercial Litigation
Insolvency Litigation

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Siva Industries and Holdings Ltd v Foreguard Shipping I Singapore Pte Ltd	High Court	Yes	[2017] SGHCR 5	Singapore	Cited for the two-stage test in assessing an application for security for costs.
Creative Elegance (M) Sdn Bhd v Puay Kim Seng and another	Court of Appeal	Yes	[1999] 1 SLR(R) 112	Singapore	Cited for the principle that the applicable principles guiding the exercise of the court’s discretion under O 23 r 1(1)(a) and under s 388(1) are the same.
SIC College of Business and Technology Pte Ltd v Yeo Poh Siah and others	Court of Appeal	Yes	[2016] 2 SLR 118	Singapore	Accepted the list of circumstances which Judith Prakash J listed out in the High Court decision of L & M Concrete Specialists Pte Ltd v United Eng Contractors Pte Ltd [2001] 3 SLR(R) 208.
L & M Concrete Specialists Pte Ltd v United Eng Contractors Pte Ltd	High Court	Yes	[2001] 3 SLR(R) 208	Singapore	Listed circumstances that a court can consider in deciding whether it is just to order security for costs.
Autoweld Systems Ltd v Kito Enterprises LLC	English Court of Appeal	Yes	[2010] EWCA Civ 1469	England and Wales	Cited for the principle that security for costs is meant to protect the defendant who is forced into litigation at the election of someone else against adverse costs consequences of that litigation.
Gartner v Ernst & Young (No 3)	Federal Court of Australia	Yes	[2003] FCA 1437	Australia	Cited for the principle that the court will not investigate in considerable detail the likelihood of success in the action.
Thune and another v London Properties Ltd and others	English Court of Appeal	Yes	[1990] 1 WLR 562	England and Wales	Cited for the ease with which a defendant may enforce a judgment for costs against a plaintiff in a jurisdiction.
Geophysical Service Centre Co v Dowell Schlumberger (ME) Inc	English High Court	Yes	(2013) 147 ConLR 240	England and Wales	Cited for whether, in the event of an adverse cost order being made against the plaintiff, there is reason to believe that the plaintiff’s litigation funders will not respond so as to enable the defendant’s costs to be paid.
Pandian Marimuthu v Guan Leong Construction Pte Ltd	High Court	Yes	[2001] 2 SLR(R) 18	Singapore	Cited for the principle that there must be appreciable degree of certainty that there will be a judgment for costs in favour of the defendant.
Sembawang Engineering Pte Ltd v Priser Asia Engineering Pte Ltd	High Court	Yes	[1992] 2 SLR(R) 358	Singapore	Cited for the caveat that the court will not generally enter into a detailed examination of the merits.
Raman Chettiar v Palaniappa Chettiar and another	N/A	Yes	[1939] MLJ 165	N/A	Cited for whether the application for security for costs is made to embarrass the plaintiff.
Christou v Stanton Partners Australasia Pty Ltd	Court of Appeal of the Supreme Court of Western Australia	Yes	[2011] WASCA 176	Australia	Cited for whether the defendant used the application as a chip to be played at a most advantageous time to stifle a bona fide claim.
Hopeshore Pty Ltd v Melroad Equipment Pty Ltd	Federal Court of Australia	Yes	(2004) 51 ACSR 259	Australia	Cited for whether the conduct of either the plaintiff or the defendant was reproachable.
Gateway Land Pte Ltd v Turner (East Asia) Pte Ltd	High Court	Yes	[1987] SLR(R) 746	Singapore	Cited for whether the order for security for costs will affect any innocent third parties.
Ho Wing On Christopher and others v ECRC Land Pte Ltd (in liquidation)	Court of Appeal	Yes	[2006] 4 SLR(R) 817	Singapore	Cited for the principle that public policy militates against allowing an impecunious company to commence legal proceedings against a defendant without giving the latter the protection of security for costs.
Frantonios Marine Services Pte Ltd and another v Kay Swee Tuan	High Court	Yes	[2008] 4 SLR(R) 224	Singapore	Cited for the principle that public policy militates against allowing an impecunious company to commence legal proceedings against a defendant without giving the latter the protection of security for costs.
StreetSine Singapore Pte Ltd v Singapore Institute of Surveyors and Valuers and others	High Court Registry	Yes	[2019] SGHCR 1	Singapore	Cited for the assessment of the merits.
Tjong Very Sumito and others v Chan Sing En and others	Court of Appeal	Yes	[2011] 4 SLR 580	Singapore	Cited for the principle that the significance of the delay is reduced by the absence of relevant prejudice.
Corbett v Nguyen	Supreme Court of New South Wales	Yes	[2008] NSWSC 1265	Australia	Cited for the principle that the significance of the delay is reduced by the absence of relevant prejudice.
Nwagwu v Elahi and another	English High Court	Yes	[2002] EWHC 2412 (Ch)	England and Wales	Cited for the principle that the court granted SFC notwithstanding that the defendants had made the application less than a month before the commencement of trial.
Hung Fung Enterprises Holdings Limited & Anor v The Agricultural Bank of China	Hong Kong Court of Appeal	Yes	[2011] HKCA 229	Hong Kong	Cited for the principle that, in the absence of any prejudice suffered by the plaintiffs, it was not a sufficient countervailing factor to not grant SFC.
Croft Leisure Ltd (in liq) v Gravestock & Owen	English Court of Appeal	Yes	[1993] BCLC 1273	England and Wales	Cited for the principle that a defendant should only be required to apply for SFC after it is able to make a considered assessment of its likely costs in defending the suit that has been brought against it.
Unimac-United Management Corp v Canadian National Railway Co	Ontario Superior Court of Justice	Yes	[2015] OJ No 1927	Canada	Cited for the principle that a defendant should only be required to apply for SFC after it is able to make a considered assessment of its likely costs in defending the suit that has been brought against it.
Elbow Holdings Pte Ltd v Marina Bay Sands Pte Ltd	High Court	Yes	[2014] SGHC 219	Singapore	Cited for the principle that the fact that the defendant waited 18 months from the commencement of the action to seek SFC did not amount to a significant delay because the parties had just completed discovery.
Peng Ann Realty Pte Ltd v Liu Cho Chit and others	High Court	Yes	[1992] 3 SLR(R) 178	Singapore	Cited for the principle that it is sufficient for the plaintiffs to show that there is a probability that they will be unable to pursue the action if the order is granted.
Absolute Living Developments Limited (In Liquidation) v DS7 Limited and Others	English High Court	Yes	[2018] EWHC 1432 (Ch)	England and Wales	Cited for the principle that there must be a significant probability that a plaintiff’s claim would be stifled.

13. Applicable Rules

Rule Name
O 23 r 1(1) of the Rules of Court (2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
s 144(1) of the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed)	Singapore
Companies Act 1967 (2020 Rev Ed) s 388(1)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Security for costs
Insolvent liquidation
Impecunious company
Delay
Prejudice
Estate costs rule
Funding agreement

15.2 Keywords

Security for costs
Liquidation
Insolvency
Civil procedure
Singapore

16. Subjects

Civil Procedure
Security for Costs
Insolvency

17. Areas of Law

Civil Procedure
Insolvency Law
Company Law
Security for Costs