Singapore Court confirms its inherent powers to grant judgment on merits instead of in default of defense: Key takeaways for Indian firms

The Singapore High Court has recently confirmed in UCO Bank, Singapore Branch v Green Mint Pte Ltd that where a defendant fails to file his defence, the Singapore Courts have inherent powers to consider a claim on its merits and issue a Judgment on its merits instead of merely a judgment in default of defence.

UCO Bank, Singapore Branch had commenced a claim against, one of its corporate customers and the company’s director pursuant to a debt arising from credit facilities granted to the Company. The Director had granted UCO Bank a personal guarantee over the debt owed by the Company to UCO Bank. While the Director had entered an appearance in the proceedings, he subsequently confirmed that he will not be filing a defence. UCO Bank was thus entitled to a judgment in default of defence.

While India’s Code of Civil Procedure allows for the enforcement of judgments of the Singapore High Court (as a superior court of a reciprocating territory) in India, a foreign judgment would not be considered conclusive and would be unenforceable if it was not granted considering the merits of the case. UCO Bank thus applied for and sought a judgment on its merits, instead of a judgment in default of defence.

In considering whether UCO Bank was entitled to judgment on the merits in its favour, the Court held that there are three issues to be decided.

a. First, whether the Court has the power to consider a claim on its merits where the defendant is in default of defence.

b. Second, assuming the Court has such a power, whether it is appropriate to exercise it.

c. Third, assuming that it is appropriate to exercise such a power, whether the plaintiff bank has discharged its burden of proving its claim for judgment to be entered on the merits in its favour.

Whether the Court has Power to Consider a Claim on Its Merits

First, the Court held that it has the power to consider a claim on its merits in default of a defence. While there is no prescribed procedure in the Singapore Rules of Court 2014 for obtaining a judgment on its merits, the Court found that this was not an obstacle to it issuing a merits judgment given that the Court’s power to do so is founded on its inherent powers, and not in the provisions of the Rules of Court 2014.

The Court also opined that its powers to grant a judgment on its merits is no different whether the 2^nd Defendant had omitted to enter an appearance or file a defence.

Whether Appropriate for Court to Exercise its Inherent Power

Second, in this particular case, the Court held that in light of the Indian law position that a foreign judgment would not be considered conclusive if it was not given on its merits, it was appropriate for the Court to exercise its inherent powers to consider the claim on its merits. The Court also held that if it did not do so, serious injustice would be caused as UCO Bank would not be able to enforce the judgment in India against the director’s assets.

Whether Bank has Discharged its Burden of Proving Its Claim

Third, the Court held that on the evidence adduced, as set out in the bank’s affidavit in support, the UCO Bank had discharged its burden of proving its claim for judgement to be entered on the merits in its favour. In particular, the Court held that UCO Bank could rely on a clause in its facility agreement which renders UCO Bank’s determination of the sum payable as conclusive.

This is the first reported decision of the Court in Singapore where the Court has granted a judgment on its merits against a defendant who has not entered a defence. The Court’s decision shows that the Singapore Courts are ready and willing to exercise their inherent powers to grant judgment on its merits in an appropriate case and will not necessarily require banks or other deserving plaintiffs to incur the additional time and costs to proceed for an ex-parte trial in order to secure a judgment on the merits.

The ex-parte trial route was the previous practice when a defendant does not enter an appearance or when the defendant fails to file its defence. The previous route would have taken at least 3 to 4 months (after the defendant is in default of entering an appearance / defence) to secure a merits judgment given that the plaintiff would have to go through the discovery stage and the pre-trial Affidavits of Evidence-in-Chief stage. Avoiding the need for an ex-parte trial would cut short this process to about 1 to 2 months.

In acting for parties who wish to enforce a debt against assets of a defendant who is located in India or other similar jurisdictions, commencing a claim in Singapore and applying for a judgment on its merits would thus prove to be a cost-effective and expeditious option.

Disclaimer - Oon & Bazul represented UCO Bank's Singapore branch, one of the parties, in the above-discussed case.

Prakaash Silvam is a Partner - Litigation and Dispute Resolution, India Practice; Lionel Chan a Partner - Litigation and Dispute Resolution; Caleb Tan is a Senior Associate - Litigation and Dispute Resolution at Oon & Bazul.