The High Court has rejected a bid by 23 defendants, including the Singapore Institute of Surveyors and Valuers (SISV), for info-tech firm StreetSine Singapore to place some $456,000 as security for costs before continuing its lawsuit against them.
The defendants had claimed they were entitled to security as there was "credible evidence" StreetSine would be unable to pay their costs if they won the case.
Assistant Registrar Zeslene Mao, who heard the application over two days in the High Court, was not convinced, based on the "current evidence" before her.
"While (StreetSine) may not be a commercial powerhouse with multi-million dollars in assets, it is nevertheless a company that has at its disposal substantial financial resources to satisfy any adverse costs orders made against it," she said in judgment grounds issued last week.
StreetSine is wholly owned by StreetSine Technology Group, which in turn is majority-owned by SPH Interactive. It is in the business of integrating big data sets with mobile applications to provide property information and transaction tools to the real estate market.
SISV is a national body representing professionals who carry out various services relating to the real estate and construction industry including valuations.
The 21 other defendants are either individual members or employees of SISV, while the 23rd defendant is Teho Property Consultants.
StreetSine is suing a total of 27 defendants, alleging that their wrongful acts and breaches have prevented the firm from marketing its valuation products to banks, financial institutions or the public in any meaningful manner in Singapore and abroad.
The first 22 defendants had sought $386,750 cost for security and Teho $70,000. Rajah & Tann lawyer Tng Sheng Rong, representing the 22 defendants, argued that StreetSine was both balance-sheet and cash-flow insolvent, based on an analysis of its financial statements. Lawyer Chia Huai Yuan from Dentons Rodyk & Davidson, representing Teho, added that StreetSine had not supported its claim that its investments in its business were discretionary and could be diverted to fund these legal proceedings.
StreetSine's lawyer Jaikanth Shankar from Drew & Napier countered that the defendants' arguments showed a flawed reading of its financial statements.
He said the issue to be decided under the Companies Act related to the company's liquidity, not profitability, and pointed out StreetSine had a high degree of liquidity, among other things.
Assistant Registrar Mao ruled that the focus was on a company's liquidity, based on the Act, and "in particular, its potential ability or inability to satisfy an adverse costs order." She made clear that the more pertinent issue was not whether the company was profitable, but if it could generate a positive cash flow from its operations and other activities to satisfy a costs order if required to do so. She noted that StreetSine had achieved a positive cash flow in 2017 which "is likely to be sustainable".
Assistant Registrar Mao added that StreetSine showed it could divert monies used for investment to fund its legal costs, if required. "All these militate against any reason to believe that StreetSine will be unable to pay the defendants' costs if ordered to do so in the future," she said in dismissing the application, while noting future applications can be made based on any new and relevant evidence.
