Hyflux Ltd v KPMG LLP: Striking Out Pleadings for Failure to Disclose Reasonable Cause of Action
Hyflux Ltd (in compulsory liquidation) and Hydrochem (S) Pte Ltd (in compulsory liquidation), and Tuaspring Pte Ltd (under receivership) sued KPMG LLP in the General Division of the High Court of Singapore, alleging breach of contract and tort relating to the preparation of accounts and financial statements. KPMG LLP applied to strike out parts of the Statement of Claim for failing to disclose a reasonable cause of action. Aedit Abdullah J dismissed the application, finding that the plaintiffs had adequately pleaded the contract, its terms, the breach, and damages.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Defendant's application to strike out parts of the Statement of Claim dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The High Court considered striking out parts of Hyflux Ltd's claim against KPMG LLP for failing to disclose a reasonable cause of action. The application was dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Hyflux Ltd (in compulsory liquidation) | Plaintiff | Corporation | Application to strike out parts of Statement of Claim dismissed | Neutral | |
| Hydrochem (S) Pte Ltd (in compulsory liquidation) | Plaintiff | Corporation | Application to strike out parts of Statement of Claim dismissed | Neutral | |
| Tuaspring Pte Ltd (under receivership) | Plaintiff | Corporation | Application to strike out parts of Statement of Claim dismissed | Neutral | |
| KPMG LLP | Defendant, Applicant | Partnership | Application to strike out parts of Statement of Claim dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge of the High Court | Yes |
4. Counsels
4. Facts
- Hyflux Ltd, Hydrochem (S) Pte Ltd, and Tuaspring Pte Ltd sued KPMG LLP.
- The plaintiffs alleged breach of contract and tort relating to the preparation of accounts and financial statements.
- KPMG LLP applied to strike out parts of the Statement of Claim.
- The plaintiffs claimed KPMG failed to identify material misstatements in Hyflux's financial statements.
- The plaintiffs claimed KPMG failed to identify that Hyflux's financial statements should not have been prepared on a going concern basis.
- The plaintiffs claimed KPMG did not comply with the Singapore Standards on Auditing.
- The plaintiffs pointed to engagement letters as the basis of the contractual relationship.
5. Formal Citations
- Hyflux Ltd (in compulsory liquidation) and others v KPMG LLP, Suit No 268 of 2022 (Summons No 1060 of 2024), [2024] SGHC 176
6. Timeline
| Date | Event |
|---|---|
| Suit filed (Suit No 268 of 2022) | |
| Further and Better Particulars of the Statement of Claim served | |
| Statement of Claim (Amendment No. 1) filed | |
| Defendant’s Written Submissions filed | |
| Hearing date | |
| Judgment reserved |
7. Legal Issues
- Failure to disclose a reasonable cause of action
- Outcome: The court held that the Statement of Claim did disclose a reasonable cause of action.
- Category: Procedural
- Breach of Contract
- Outcome: The court found that the plaintiffs had adequately pleaded the contract, its terms, and the breach.
- Category: Substantive
8. Remedies Sought
- Damages
9. Cause of Actions
- Breach of Contract
- Tort
10. Practice Areas
- Commercial Litigation
11. Industries
- Accounting
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Hyflux Ltd (in compulsory liquidation) and others v KPMG LLP | High Court | Yes | [2023] SGHC 270 | Singapore | Cited for remarks made by Justice Choo Han Teck on the pleadings. |
| Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and others | N/A | Yes | [1997] 3 SLR(R) 649 | Singapore | Cited for the principle that pleadings are to be struck out only in plain and obvious cases. |
| Kalzip Asia Pte Ltd v BFG International Ltd | High Court | Yes | [2018] SGHC 152 | Singapore | Cited for the principle that failure to plead the contract, the contractual terms alleged to have been breached, the nature of the breach and damages would be an inadequate claim in contract, and would not disclose a reasonable cause of action. |
| Keppel Tatlee Bank Limited v Bandung Shipping Pte Ltd | High Court | Yes | [2002] SGHC 47 | Singapore | Cited by the plaintiffs to support the adequacy of their pleadings. |
| Multi-Pak Singapore (in receivership) v Intraco | N/A | Yes | [1992] 2 SLR(R) 382 | Singapore | Cited for the object of the rules of pleading. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Order 18 r 19(1)(a) of the Rules of Court (2014 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Statement of Claim
- Striking out
- Reasonable cause of action
- Engagement letters
- Singapore Standards on Auditing
- Financial statements
- Material misstatements
- Going concern basis
15.2 Keywords
- striking out
- pleadings
- reasonable cause of action
- breach of contract
- auditing
- financial statements
- Hyflux
- KPMG
17. Areas of Law
16. Subjects
- Civil Procedure
- Contract Law
- Auditing