Automated Summary
Key Facts
Terraform Labs Pte Ltd (TFL) sought to strike out an application by non-parties to join ongoing litigation (OA 3) against TFL, which was filed in breach of a recognition order (ORC 13) under the SG Model Law. The non-parties aimed to gain access to funds in an escrow account by joining OA 3, but the court ruled that their application was a violation of the order. The court granted TFL's request, striking out the non-parties' application as to TFL and awarding costs of S$74,200 against them jointly and severally for the expenses incurred in enforcing the recognition order.
Issues
- The court assessed the reasonableness of the $74,200 costs awarded to TFL for enforcing the recognition order. It concluded that the costs were justified given the non-parties' intentional breach, the urgency of the matter, and the need to compensate TFL for the expenses incurred in defending against the unauthorized application. The principles from Order 22 r 3(2) of the SICC Rules guided this determination.
- The court determined that the non-parties' application (SUM 19) to join OA 3 was commenced in breach of the recognition order (ORC 13) issued under the SG Model Law. This order, based on TFL's Chapter 11 plan recognized in the US, prohibited claims against TFL in Singapore without court permission. The non-parties ignored this injunction, leading to TFL's application to strike out SUM 19 and seek costs.
Holdings
The court awarded $74,200 in costs to Terraform Labs Pte Ltd (TFL) against the non-parties for intentionally breaching the Plan Recognition Order (ORC 13) by filing SUM 19 to join OA 3. The costs were deemed reasonable and proportionate given the non-parties' unreasonable conduct, which caused TFL to incur legal expenses enforcing the recognition order. The court emphasized that SUM 19 was a wasteful and ill-conceived attempt to circumvent the Plan's classification scheme and access escrow funds, leading to a full costs award under the SICC Rules.
Remedies
- The non-parties are ordered to pay a total of S$74,200 in costs and disbursements to TFL, to be paid jointly and severally.
- No party may take any step to become a party to, or otherwise participate in, OA 3 against TFL without obtaining leave to be excluded from the stay ordered in ORC 13.
- The non-parties' application in SUM 19 to be joined as claimants to OA 3 as against Terraform Labs Pte Ltd (TFL) was struck out and dismissed.
Monetary Damages
74200.00
Legal Principles
The court applied the principles of costs under Order 22, r 3(1)-(2) of the SICC Rules 2021, emphasizing reasonableness, proportionality, and the need to compensate the successful party for sensibly incurred expenses. The assessment considered factors like the urgency of the action, conduct of the parties, and the existence of offers to settle.
Precedent Name
- Re Terraform Labs Pte Ltd
- Senda International Capital Ltd v Kiri Industries Ltd
- Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others
Cited Statute
- Insolvency, Restructuring and Dissolution Act 2018
- United States Code (Title 11)
- UNCITRAL Model Law on Cross-Border Insolvency
Judge Name
James Michael Peck
Passage Text
- SUM 19 should not have been brought by the non-parties at all. The conduct of the non-parties in pressing ahead with SUM 19 was an unreasonable breach of ORC 13.
- Class 3 of the Plan is composed of the representative parties that had rights to the escrow as of the date when the Plan was structured. That class cannot be reimagined, redefined and expanded without also amending the Plan.
- The non-parties' application in [SUM 19] dated 20 March 2025 to be joined as claimants to [OA 3] as against [TFL], was commenced in breach of [ORC 13].