Judgment

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]                                                                                                                                                           

Goh Joon Seng J:

1           This is an appeal by the defendant/respondent (‘the defendant’) against my decision allowing the appeal by the plaintiffs/appellants (‘the plaintiffs’) against the order of the registrar of 17 January 1991 giving the defendant unconditional leave to defend.

The facts

2           The plaintiffs are and were at all times a finance company incorporated in Malaysia.

3           By a block discounting agreement dated 9 July 1984 (‘the block discounting agreement’) made between the plaintiffs and Motor Sport Trading Sdn Bhd (‘the dealer’), the plaintiffs agreed that they would, at the request of the dealer and if they thought fit, purchase from the dealer the rights of the dealer (‘the contract rights’) under the hire-purchase agreements (‘the hire-purchase agreements’) entered into by the dealer as owner and the hirers therein named together with the goods comprised in such agreements subject to the terms and conditions therein.

4           By cl 7(7) of the block discounting agreement, the dealer undertook to collect punctually, as agent for the plaintiffs, all sums due under the hire-purchase agreements and to remit such sums without any deduction to the plaintiffs at such intervals as the plaintiffs required. The plaintiffs required the dealer to remit instalments so collected three times in every month.

5           By cl 10(1) of the block discounting agreement, the dealer undertook to indemnify on demand the plaintiffs against any loss or damage whatsoever that the plaintiffs might suffer or incur as a result of purchasing the dealer’s contract rights in respect of the hire-purchase agreements.

6           By cl 11 of the block discounting agreement, the dealer agreed that should they fail to pay moneys due to the plaintiffs as demanded, they would be liable to pay interest at 12% pa on such sums.

7           The defendant and one Liew Chin Kwee are the guarantors under the guarantee dated 9 July 1984 in favour of the plaintiffs. The guarantee attached to the block discounting agreement reads:

We the undersigned hereby (jointly and severally) agree —

(1) to pay to you by way of indemnity upon demand all sums that become payable to you by the dealer under
      the said agreement as between you and the dealer;

(2) that your rights under this indemnity shall not be prejudiced by your granting any time or other indulgence to
      the dealer or any variation of the terms of the said agreement, a copy of which we acknowledge to have
      read.

8           The defendant was then a director and shareholder of the dealer.

9           Pursuant to the block discounting agreement and at the requests of the dealer, the plaintiffs did from time to time purchase from the dealer their contract rights under various hire-purchase agreements.

10       As at 15 October 1989, the plaintiffs suffered loss and damage in the sum of M$187,355.43 being the total instalments outstanding under the hire-purchase agreements, the contract rights of which the plaintiffs had purchased from the dealer pursuant to the block discounting agreement.

11       After giving credit for the sum of M$17,380.13, which represents the retention on blocks of hire-purchase agreements which have not yet been settled, the plaintiffs’ loss is M$169,955.30.

12       On 13 July 1987 the plaintiffs commenced proceedings in Suit No 23–928 of 1987 in the High Court of Malaya at Johore Bahru against the dealer, the defendant and the co-guarantor, the said Liew Chin Kwee, to recover the amount due under the block discounting agreement.

13       Judgment in default of appearance was entered against the defendant on 7 May 1988. The said judgment remains unsatisfied.

14       On 10 November 1989, the plaintiffs commenced proceedings herein against the defendant. They applied for summary judgment under O 14 of the Rules of the Supreme Court 1970 against the defendant on 19 April 1990. The application came up for hearing before the registrar on 17 January 1991 when the registrar ordered that the defendant be given unconditional leave to defend.

15       The plaintiffs appealed. The appeal came up for hearing before me. I allowed this appeal with costs. The defendant now appeals to the Court of Appeal. I now give my grounds for my decision.

16       The defendant raises four main issues which he contends are triable issues. They are:

(1)    The plaintiffs no longer have a right of action on the guarantee as that right has been extinguished by the judgment in default dated 7 May 1988 entered into against him by the High Court of Malaya at Johore Bahru. The defendant’s contention is that the cause of action against him under the guarantee is merged in the judgment given against him by the High Court of Malaya. The defendant relies on 26 Halsbury’s Laws of England (4th Ed) at para 550 which states:

A plaintiff who has once sued a defendant to judgment may not while the judgment stands even though unsatisfied, sue him again for the same cause, not because he is estopped from doing so … but because the cause of action is merged into the judgment which creates an obligation of a higher nature.

17       I reject his contention as merger does not apply to foreign judgments and the judgment of the High Court of Malaya is a ‘foreign’ judgment.

18       Spencer Bower and Turner on The Doctrine of Res Judicata (1969) at para 433 states:

An English cause of action, or prosecution is deemed to be merged in and effaced by an English civil or criminal judgment pronounced thereon and a civil judgment includes the decision of an arbitral tribunal whether domestic or statutory but no foreign judgment has this or any effect upon the original cause of action. …

19       Paragraphs 436 and 437 state:

A foreign judgment is not deemed of a higher nature than the original cause of action as is an English judgment: therefore no such judgment operates as a merger or as a bar to subsequent proceedings in an English court for the same relief, and on the same cause of action, as that which formed the subject of the foreign judgment.

‘Foreign’ is here used in its strict technical sense of ‘non-English’. Accordingly a recovery in the courts of any British colony or any part of Her Majesty’s Dominions other than England, is no more a bar to a second recovery in an English court than is a foreign judgment in the popular sense of the word.

(2) The second contention is that the plaintiffs have, by not preserving and/or confirming their security in the motor vehicles against the individual hirers, acted in breach of the terms in the guarantee. Hire-purchase agreements are contracts of hire with option to purchase. The ownership of the motor vehicles remains vested in the dealer. Clause 4 of the block discounting agreement provides that if the plaintiff ‘accepts the dealer’s request to purchase, it shall notify the dealer accordingly and thereupon the contract rights and the property in the goods comprised in the agreements in question shall vest in the (plaintiff) …’. Therefore the motor vehicles are not ‘a security’ that the plaintiffs’ ought to but failed to preserve. They are the property of the plaintiffs. In any case, I see no implied term in the guarantee that the plaintiffs have to preserve any security before enforcing the said guarantee.

(3) The defendant, in the alternative, contends that the plaintiffs have, by not preserving and/or enforcing their security, acted in breach of an equitable duty, thereby discharging the defendant to the extent that the securities have depreciated in value. The right to repossess the motor vehicles in the event of default rests with the dealer and upon the purchase by the plaintiffs of the dealer’s contract rights under the hire-purchase agreements, such right rests with the plaintiffs. This is not a right which the defendant could take by subrogation after payment under the guarantee. (See Chatterton v Maclean.) In that case, by a hire-purchase agreement a finance company, St Margaret Trust (‘the trust’) hired a car to one Butler with an option to purchase after 18 instalments the car for ten shillings. By a guarantee, the defendant guaranteed the due performance of the hire-purchase agreement by the hirer. The hirer, in breach of the hire-purchase agreement, sold the car to a third party who in turn sold it to the plaintiff. At that time a sum of £153 17s 8d was due and owing from the hirer to the trust being accrued hire charges. On receiving a demand from the trust, the plaintiff offered to pay to the trust the amount of £153 17s 8d plus £6 for legal costs, making a total of £159 17s 8d. The trust accepted the payment for the accrued hire charges and assigned to the plaintiff the amount due by the hirer together with the benefit of the hirepurchase agreement and the guarantee, and also confirmed that they had no further claim to the property in the car. The plaintiff thereafter sued the guarantor for £159 17s 8d, being the amount due from the hirer before the assignment. Parker J, in giving judgment for the plaintiff against the defendant under the guarantee, at pp 765–766, said:

I do not think that a surety under a hire-purchase agreement has any right in any circumstances to have possession of the property. It is not all the rights of the owner to which he succeeds by payment. I should have thought it was quite clear, for instance, that the right of purchase, the option to purchase, is a right solely in the purchaser and not one of which the guarantor could avail himself. Similarly, it seems to me that the right to seize and take possession of the car as against the hirer which is provided by the hire-purchase agreement is one personal to the owner and not one to which the guarantor can succeed, as it were, by payment.

If the defendant has no rights of subrogation to repossess the motor vehicles, the defendant’s interest could not have been prejudiced by the plaintiffs’ failure, if any, to preserve and/or enforce their security in the said motor vehicles as contended by the defendant.

(4) The fourth issue raised by the defendant is that the plaintiffs are not entitled to judgment unless the plaintiffs are in a position to deliver the motor vehicles on payment by the defendant. The plaintiffs have not relinquished their rights, title and interest in the motor vehicles. The title still rests with them and failure to take possession of the vehicle registration books has not deprived the plaintiffs of their title to the motor vehicles as the registration books are not documents of title. Morris LJ in Central Newbury Car Auctions Ltd v Unity Finance Ltd & Anor (Mercury Motors, Third Parties) at p 920 said:

… it cannot be assumed that the person in possession of a car and its registration book is the owner of the car. The absence of a registration book when a car is being sold will naturally give rise to much inquiry. The existence of one in the hands of a seller does not remove all occasion for inquiry and does not prove legal ownership. (Emphasis added.)

20       The plaintiffs have, however, agreed to hand over to the defendant whatever documents they have in their possession on receipt of payment.

21       For the reasons given, I was of the view that the defendant has raised no triable issues; on the other hand, the plaintiffs’ claim is clear. It is based on a guarantee by which the defendant undertook to indemnify the plaintiffs upon demand by the plaintiffs all sums payable by the dealer. There is no doubt that this amount is due from the dealer as it is part of the sum of M$257,194.74 for which the plaintiffs have obtained summary judgment against the dealer in the High Court of Malaya at Johore Bahru in Suit No 23–928 of 1987.

22       Accordingly, I allowed the plaintiffs’ appeal with costs.

Appeal allowed.

Reported by Liu Hern Kuan