Law Bites – March 2022

4 Ways Companies Can Better Position Themselves

In Light Of The New Rules Of Court 2021

 

It is not often that the Rules of Court are changed. For those fortunate enough to have never been involved in legal proceedings, the Rules of Court are essentially the rules that govern all court proceedings in Singapore. While a large majority of the Rules of Court remained unchanged, there are some rule changes that can empower companies and avoid potential pitfalls in court proceedings.

With the new Rules of Court (ROC 2021) taking effect from 1 April 2022, this provides an opportune time for companies to review their contracts and policies and consider including the following terms in any contractual negotiations. While adopting these changes would not guarantee a definitive outcome in any court proceedings, it might just save some invaluable time and expense.

STEP 1: SAY YOU NEED TO TALK

ROC 2021 makes it an express duty for any party to a suit to consider amicable resolution of the dispute before and during the course of any action. Not only does a claimant have to make an offer of amicable resolution before commencing action, but the defendant also cannot reject an offer of amicable resolution without reasonable grounds. While no express sanction has been stipulated resulting from a breach of the above duty, it is likely that costs consequences will follow the defaulter much like the current regime.

This duty to have parties consider amicable resolution before any action is more likely to put a claimant on the back foot once action is commenced if there is material non-compliance. It is foreseeable that the Court will not look too kindly on such claimant-defaulters even if there is a high likelihood that any offer for amicable resolution will be fruitless or used as a delay tactic by the defendant.

With this tension in mind, it may be opportune for parties to include a multi-tiered dispute resolution clause into their contracts where it is mandatory for parties to enter into negotiations and/or mediation within a stipulated time prior to any court action. Not only will this allow parties to control the timeline for pre-action proceedings, thereby creating more certainty, it will also increase chances for recovery of legal costs for any default in adhering to the dispute resolution clause.

STEP 2: GO WHEREVER THEY MAY GO

COVID-19 may have closed borders of many countries, but it definitely has not stopped businesses from dealing with overseas counterparts. Under the present regime, a claimant has to seek the Court’s permission to serve court documents on overseas defendants. This lengthens the court process and results in higher costs incurred by a claimant.

The ROC 2021 addresses this issue by avoiding the need to obtain court approval where parties contractually agree on service of court documents overseas. This recognition of a prior express agreement by parties to serve court documents on each other not only results in costs savings, but also reduces the requirement on the claimant to present certain key documents early on in proceedings. This could also be especially useful in cases where such early disclosure may be detrimental to the pinning of the defendant to certain positions.

It would thus be advantageous to companies to include an express provision in their contracts to allow service of court documents overseas. Not only will it allow companies to go after the counterparty wherever they may go, but the increased response time may also be essential in any recovery attempt when things take a turn for the worst.

STEP 3: FIX YOUR CASE

Another notable feature of ROC 2021 is the Court’s ability to order that affidavits of evidence-in-chief (AEICs) be filed at any time. This is a marked departure from the current regime where AEICs are filed after discovery of documents. The change is to prevent abuse of the discovery regime in court proceedings where a party hopes for “helpful” documents to turn up during the course of discovery to strengthen its case.

This would mean companies that have kept their own contemporaneous records and relevant documents will be at an advantage in any court proceedings. Not only will such documents need to be assessed early on, availability of witnesses will also need to be considered much earlier.

Companies may want to review their employment agreements for this purpose. They can consider revising the contracts to expressly provide that the employees have a duty to cooperate and make themselves available when the company may be involved in legal proceedings. The employment contracts should also contain clear and comprehensive post-termination obligations that oblige soon-to-be ex-employees to return materials and records in their possession on the cessation of their employment, thus reducing issues of recalcitrant employees refusing to cooperate post-employment.

This could be supplemented by internal policies that put in place proper systems which ensure that key company information relating to contracts with suppliers, customers or other third parties is, to the best extent possible, controlled by the company (thereby reducing the need to rely on an ex-employee’s cooperation in providing some information), and which also enable the company to contact ex-employees for further information even after they leave. The company’s personal data policies may have to be reviewed to be in line with these internal policies.

In-house legal counsels will thus need to coordinate with HR departments early on to create and implement such changes.

As an aside, a rather interesting rule in respect of AEICs is now present. Witnesses will have to include a coloured photograph on their AEICs under the ROC 2021. While it is unlikely that non-compliance will result in the evidence being struck out, it is best to ensure that such administrative matters are also dealt with early on.

STEP 4: ALL THE SINGLE INTERLOCUTORY APPLICATIONS

Speedy resolution is definitely a key ideal in ROC 2021. Under the new rules, the grounds on which to make interlocutory applications – being applications file by parties to obtain information or documents which they believe will assist their respective case at trial – are reduced. As far as possible, only a single interlocutory application prior to trial is to be made by each of the parties. While it would not be impossible to file a second application to seek further interlocutory relief, good reasons would have to be provided to convince the Court to allow such an application. This would thus force parties to fully consider from an early stage the interlocutory reliefs they require and make the necessary requests at the same time.

While fixing your case early would reduce any issues with compliance with this rule, it makes it imperative for companies to spend much more time in assessing their case prior to initiating action rather than letting the interlocutory applications shape the case. It is not uncommon for parties to use the interlocutory application process to fill gaps in their knowledge and/or obtain critical documents from the other party. Companies should thus be prepared to consider pre-action discovery proceedings as part of any litigation strategy and for such expense to be recoverable from the eventual defaulting party.

CONCLUSION

ROC 2021 will undoubtedly affect the way court proceedings are conducted. Easily overlooked, but important nonetheless, are preparatory steps that companies can take to place themselves in a more favourable and advantageous position in advancement of any court proceedings they may have to deal with. Consideration of the above proposals would be a first step companies can take to put themselves in better stead when handling stressful court proceedings.

 

Hariz Lee
Counsel
JTJB Singapore Office
E: harizlee@jtjb.com
T: 6329 2413/ 9296 3667

 

Kay Yong
Counsel
JTJB Singapore Office
E: kayyong@jtjb.com
T: 6329 2414 / 9620 9904

 

This update is for general information only and is not intended to constitute legal advice. JTJB has made all reasonable efforts to ensure the information provided is accurate at the time of publication.