Bakery Mart Pte Ltd v Ng Wei Teck Michael and Others

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 05 October 2004
• Neutral Citation: [2004] SGHC 226
• Date: 05 October 2004
• Subject Matter: Judgments and orders,Whether plaintiff's allegation of wrongful conduct or mistake of receivers and managers made out,Aplication to set aside consent judgment entered into by receivers and managers of plaintiff company,Whether circumstances justifying setting aside of consent judgment,Civil Procedure
• Docket Number: Originating Summons No 249 of 2004
• Published date: 11 October 2004
• Defendant Counsel: Ng Yeow Khoon and David Chan (Shook Lin and Bok),Philip Ling (Wong Tan and Molly Lim LLC)
• Court: High Court (Singapore)
• Plaintiff Counsel: Gabriel Peter, Ismail Atan and Calista Peter (Gabriel Law Corporation)

5 October 2004

Belinda Ang Saw Ean J:

1 In this originating summons, Bakery Mart Pte Ltd (“Bakery Mart”), a company in receivership, sought to set aside the consent judgment entered into on 7 May 2003, following the acceptance by the receivers and managers of the third defendant’s claim of $1.7m in Suit No 1305 of 2002. The third defendant is Culina Pte Ltd (“Culina”). The first two defendants, Michael Ng Wei Teck (“D1”) and Peter Chay Fook Yuen (“D2”), are the joint and several receivers and managers of Bakery Mart. D1 and D2 are from the firm of KPMG.

2 At the relevant times, Bakery Mart was in the business of distributing baking and confectionery materials. In late 1999, Bakery Mart agreed with Sincere Watch Limited (“Sincere Watch”) to each acquire an equal shareholding in Culina, a company that was in the business of supplying and distributing fresh and frozen foods, pastry products and wines. Bakery Mart lacked funds to pay for half of the shares in Culina and an option deed was entered into between the parties. Upon execution of the option deed, Sincere Watch made a pre-payment to Bakery Mart of $500,000, being the option price, as well as extended to it a loan of $100,000. From time to time, Sincere Watch continued to advance moneys to Bakery Mart.

3 On 5 September 2002, Sincere Watch sued Bakery Mart in the High Court in Suit No 1057 of 2002 to recover the option price, various loans and accrued interest due and owing to Sincere Watch. Bakery Mart’s defence was that the debts to Sincere Watch were no longer due as they had been extinguished in a restructuring agreement with Sincere Watch. Sincere Watch applied for summary judgment. The assistant registrar granted Bakery Mart conditional leave to defend the action, the condition being the provision of a banker’s guarantee for the full amount of the claim in the action.

4 On 20 November 2002, the decision of the assistant registrar was affirmed on appeal to a judge in chambers. The banker’s guarantee for the full amount of the claim in the action was to be furnished by 20 December 2002. Bakery Mart appealed on 14 December 2002 against the conditional order. Whilst that appeal was pending and as the condition was not fulfilled, default judgment was entered against Bakery Mart on 21 December 2002. The appeal to the Court of Appeal was heard on 24 July 2003 and the appellate court, in allowing the appeal, granted Bakery Mart unconditional leave to defend Sincere Watch’s action.

5 On 30 October 2002, Culina sued Bakery Mart in the High Court in Suit No 1305 of 2002 to recover various loans totalling $1,538,179.19 plus interest. As at 30 September 2002, the total amount due and owing was $1,700,882.57. Bakery Mart entered appearance on 12 November 2002.

6 I pause here in the narration to mention other significant dates in the chronology. On 13 January 2003, Bakery Mart was placed under receivership by United Overseas Bank Limited (“UOB”) pursuant to a deed of debenture executed on 15 December 2000 between Bakery Mart and UOB’s predecessor in title, the Industrial & Commercial Bank Limited. By the deed of debenture, the receivers and managers so appointed were to be the agents of Bakery Mart. UOB sued Bakery Mart in the High Court in Suit No 1514 of 2002. On 26 March 2003, UOB obtained summary judgment in the sum $4.7m and US$108,297.88 against Bakery Mart and two of its directors.

7 At the time the receivers and managers were appointed, there were four pending suits involving Bakery Mart. They were:

(a) Suit No 887 of 2002

(b) Suit No 1057 of 2002

(c) Suit No 1305 of 2002

(d) Suit No 1514 of 2002

8 M/s Gabriel Peter & Partners (now known as Gabriel Law Corporation) remained on record as solicitors for Bakery Mart in Suit No 1057 of 2002. The receivers and managers appointed M/s Shook Lin & Bok to act for Bakery Mart and the firm took over the conduct of the other three suits. I should in passing mention that Suit No 887 of 2002 was commenced by Bakery Mart against Culina and Avante Investments Pte Ltd, a subsidiary of Sincere Watch. It was later discontinued on the instructions of the receivers and managers. On 10 March 2003, M/s Shook Lin & Bok filed Notice of Change of Solicitors in Suit No 1305 of 2002. A Defence and Counterclaim was filed on behalf of Bakery Mart on 19 March 2003. Thereafter, Culina on 26 March 2003 applied for summary judgment. On 7 May 2003, M/s Shook Lin & Bok attended the hearing of Culina’s application for summary judgment and consented to judgment being entered against Bakery Mart. That consent judgment formed the basis of a statutory demand against Bakery Mart.

9 Tan Hwa Heng, a director of Bakery Mart, affirmed the supporting affidavit. Ng Yew Hong, the former managing director of Bakery Mart, affirmed a second affidavit. Their contention, as gathered from the affidavits and the submissions of counsel, Mr Peter Gabriel, was that the company’s consent to the judgment was vitiated by mistake, or by the bad faith of the receivers and managers, or by the unfairly prejudicial result of its consent, given the decision of the Court of Appeal in Suit No 1057 of 2002 which granted Bakery Mart unconditional leave to defend the action brought by Sincere Watch. The court was asked to exercise its inherent jurisdiction to set aside the consent judgment in order to provide Bakery Mart with an opportunity to defend the claim in Suit No 1305 of 2002 as its defence was the same as its defence against Sincere Watch.

10 Counsel for Culina, Mr Philip Ling,...