Peh Yeng Yok v Tembusu Systems Pte Ltd [2016] SGHC 36
[14]: A search order is a draconian measure and will only be granted if necessary in the interests of justice. In line with this overriding principle of necessity, a plaintiff applying for a search order must show that:
(a) there is an extremely strong prima facie case;
(b) the damage that would be suffered if a search order was not granted is very serious;
(c) there is a real possibility that the defendant(s) would destroy relevant documents; and
(d) the effect of the search order would not be out of proportion to the legitimate object of the order.
See Asian Corporate Services (SEA) Pte Ltd v Eastwest Management Ltd (Singapore Branch) [2006] 1 SLR(R) 901 (“Asian Corporate Services”) at [14].
[15] A search order can be set aside if the defendant subsequently shows that one or more of these elements had not been proven. It can also be set aside if the party obtaining it had failed to make full and frank disclosure of material facts that would affect the likelihood of the order being granted: Bengawan Solo Pte Ltd and another v Season Confectionery Co (Pte) Ltd [1994] 1 SLR(R) 448 at [12]. Material non-disclosure alone would be sufficient ground to set aside the order.
For the purpose of setting aside an order, the court can also consider events subsequent to the grant of the order in determining whether the requirements of a search order have been met: BP Singapore Pte Ltd v Quek Chin Thean and others [2011] 2 SLR 541 (“BP Singapore”) at [55]: [16].
The Court found that the plaintiff failed to show that (a) he had an extremely strong prima facie case, (b) there was a real possibility that the defendants would destroy evidence, and (c) the effect of the search order was proportionate to the legitimate object of the order: [17].
The Court found on the facts that the plaintiff had not made out an extremely strong prima facie case of minority oppression: [19].
Surreptitious behaviour alone does not compel the conclusion that a defendant will destroy evidence in contempt of court to frustrate a claim brought by the plaintiff; to hold otherwise would undermine the principle that a search order is an extreme remedy meant for extreme cases. It is not sufficient to just allege nefarious conduct or that the defendant is untrustworthy. The question to be asked in every case is whether a defendant’s conduct or untrustworthy nature shows a propensity to destroy relevant evidence: [31].
The Court found that the evidence in this case did not compel the inference that the defendants have the propensity to destroy evidence. The plaintiff’s allegations are based on conjecture and suspicion: [37].
On the proportionality of the effect of the search order to the legitimate object of the order, the Court accepted the defendants’ assertion that the search order would adversely affect potential investors’ confidence in the Company. The Company needed fresh funding to continue developing and implement its projects. In contrast, the object of the search order was principally to preserve evidence of misappropriation of the Company’s funds, and this was largely based on the Suspicious Transactions in respect of which the defendants have provided details and supporting documents. In addition, much of the plaintiff’s case has turned out to be based on speculation and suspicion: [39].