Cheo Sharon Andriesz v Official Assignee of the estate of Andriesz Paul Matthew

• Judgment Date: 18 January 2013
• Date: 18 January 2013
• Docket Number: Civil Appeal No 49 of 2012
• Court: Court of Appeal (Singapore)

Cheo Sharon Andriesz

Plaintiff

and

Official Assignee of the estate of Andriesz Paul Matthew, a bankrupt

Defendant

[2013] SGCA 8

Sundaresh Menon CJ

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 49 of 2012

Court of Appeal

Insolvency Law—Bankruptcy—Bankruptcy effects—Bankrupt disposing of property to ex-wife pursuant to interim consent judgment in divorce suit made between date of bankruptcy application and date of bankruptcy order—Whether s 77 (1) Bankruptcy Act (Cap 20, 2009 Rev Ed) applied to disposition of property pursuant to court order—Whether ex-wife fell within s 77 (3) (a) Bankruptcy Act (Cap 20, 2009 Rev Ed)—Whether court should ratify disposition—Sections 77 (1) and 77 (3) (a) Bankruptcy Act (Cap 20, 2009 Rev Ed)

After a bankruptcy application against the appellant's ex-husband (‘the Bankrupt’) was filed and before a bankruptcy order against the Bankrupt was made, the appellant and the Bankrupt agreed to an interim consent order (‘the ICJ’) in a divorce suit, which required the Bankrupt to transfer his interest in two properties to the appellant (‘the Disposition’).

On the appellant's application for, inter alia, ratification of the Disposition, the High Court judge (‘the Judge’) relied on the English High Court decision of In re Flint (a bankrupt)[1993] Ch 319 (‘Flint’) to hold that the transfer of an interest in property by a debtor to his or her spouse pursuant to a court order was a ‘disposition of property’ within the meaning of s 77 (1) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (‘the Act’). The Judge held that the Disposition was void by virtue of s 77 (1) of the Act and declined to ratify the Disposition.

On appeal to the Court of Appeal, the appellant argued that (a) s 77 (1) did not apply to a disposition of property pursuant to a court order; (b)the appellant fell within s 77 (3) (a) of the Act; and (c)the court should ratify the Disposition.

Held, dismissing the appeal:

(1) The court in Flint did not rely either on s 39 of the Matrimonial Causes Act 1973 (c 18) (UK) (‘the MCA 1973’) or on parts of the decision in In re Abbott (a bankrupt), Ex parte Trustee of the Property of the Bankrupt v Abbott (PM)[1983] Ch 45 which relied on that provision to arrive at its decision. Therefore, the absence of a Singapore equivalent of s 39 of the MCA 1973 was not an overwhelming ground for arguing against the applicability of Flint in Singapore: at [19] and [20] .

(2) The ICJ might have been the means by which the Disposition was made, but the Disposition was nonetheless made by the Bankrupt. The common law position was clear: a court order requiring a transfer of property was a disposition, and it was a disposition made by the person to whom the court order was directed. All s 39 of the MCA 1973 did, therefore, was to clarify, rather than to effect a substantive change in the law as such. The same conclusion might also be arrived at from a reading of s 77 (1) of the Act, both alone as well as in the context of the Act. Further, if the appellant's submission was accepted, a disposition during the period beginning with the making of the bankruptcy application and ending with the making of the bankruptcy order pursuant to an out-of-court settlement of a dispute would be caught by s 77 (1) of the Act, but if the terms of settlement were recorded as a consent court order instead, a disposition pursuant to such an order would not be so caught. There was no logical basis whatsoever for distinguishing between these two scenarios. This was especially so in the light of the line of decisions from this court holding that a liquidator (and, by analogy, an Official Assignee) might go behind court orders, which were open to scrutiny during liquidation and bankruptcy, respectively: at [23] to [25] and [27] .

(3) Section 73 B (2) of the CLPA made it clear that the section was meant to operate independent of bankruptcy law. Section 73 B of the CLPA could not be used to limit the scope of s 77 (1) of the Act. The mere fact that s 73 B (1) of the CLPA might be applicable in this case did not - in and of itself - render s 77 (1) of the Act inapplicable: at [29] .

(4) Section 77 (1) of the Act therefore applied to a disposition of property pursuant to a court order. This conclusion was consistent with the wording and philosophy of s 77 (1) in particular and the Act in general, as well as with logic and common sense. It was also the position at common law as set out in Flint and Treharne v Forrester[2003] EWHC 2784 (Ch), decisions which were not based on s 39 of the MCA 1973 and which were applicable in this case. There was therefore no need for the existence of a separate statutory provision (such as s 39 of the MCA 1973) in order to clarify that this was the position: at [30] .

(5) The facts of this case were quite stark. For the reasons provided in the Judge's grounds of decision, the appellant had not proved that she fell within s 77 (3) (a). Further it was not disputed that the court which granted the ICJ requiring the Disposition was not informed that the bankruptcy application had been made. Given this, and the reasons detailed in the Judge's grounds of decision, the court was not prepared to ratify the Disposition: at [9] .

[Observation: It was prudent for parties to a litigation to conduct the relevant bankruptcy searches before the commencement of proceedings. This applied equally to divorce cases. Indeed, in this last-mentioned regard, there was merit in considering the promulgation of relevant Practice Directions in both the Family Court as well as the High Court which required the parties in the proceedings at first instance to list both basic information (including the results of bankruptcy searches) as well as any other information which might be relevant to the court in making a consent order pursuant to an application for the same by the parties concerned: at [32] .]

Abbott (a bankrupt) , Re [1983] Ch 45 (refd)

Cheo Sharon Andriesz v Official Assignee of the estate of Andriesz Paul Matthew, a bankrupt [2012] 4 SLR 89 (refd)

Flint (a bankrupt) , Re [1993] Ch 319 (folld)

Lee Hong Choon v Ng Cheo Hwee [1995] 1 SLR (R) 92; [1995] 2 SLR 663 (refd)

Treharne v Forrester [2003] EWHC 2784 (Ch) (folld)

Bankruptcy Act (Cap 20, 2009 Rev Ed) ss 77 (1) , 77 (3) (a) (consd) ; ss 123 (3) , 123 A (5) , 128 (2) (b)

Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) ss 73 B, 73 B (1) , 73B (2)

Bankruptcy Act 1914 (c 59) (UK) s 42

Insolvency Act 1986 (c 45) (UK) ss 284, 284 (1) , 339, 340

Matrimonial Causes Act 1973 (c 18) (UK) ss 24, 39 (consd)

Lim Seng Siew, Susan Tay and Ong Ying Ping (Ong Tay & Partners) for the appellant

Lee Eng Beng SC, Chua Beng Chye, Raelene Su-Lin Pereira, Cheong Wei Yan Ginny and Matthew Teo (Rajah & Tann LLP) for the respondent.

Andrew Phang Boon Leong JA

(delivering the grounds of decision of the court):

Introduction

1 This was an appeal against the decision of the High Court judge (‘the Judge’) holding that the disposition of the interest of the appellant's ex-husband (‘the Bankrupt’) in two properties to the appellant (‘the Disposition’) pursuant to an interim consent judgment in a divorce suit (‘the ICJ’) made between the date of the bankruptcy application against the Bankrupt and the date of the bankruptcy order was void by virtue of s 77 (1) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (‘the Act’). The Judge also declined to ratify the Disposition (see Cheo Sharon Andriesz v Official Assignee of the estate of Andriesz Paul Matthew, a bankrupt [2012] 4 SLR 89 (‘the GD’)). The properties in question (collectively, ‘the Properties’) consist of the matrimonial home at 35 Kew Drive, Singapore 466104 (‘the matrimonial property’) and a condominium in Penang (‘the Penang property’).

2 We dismissed the appeal, and we now set out the grounds for our decision.

The facts

3 The salient chronology of events is set out in the table below (with the crucial events highlighted in bold).

Date	Event
10 Aug 2010	Bangkok Bank Public Company Limited (‘the Bank’) issued a statutory demand against the Bankrupt for the sum of US$8,671,681.56.
14 Aug 2010	The statutory demand was served by posting on the front gate of the matrimonial property.
14 Sep 2010	The Bankrupt applied in Originating Summons (Bankruptcy) No 28 of 2010 (‘OSB 28/2010’) to set aside the statutory demand.
22 Oct 2010	The appellant filed an affidavit in support of OSB 28/2010. In it, she stated that she was present when the statutory demand was served, and that she opened the envelope containing the statutory demand and informed the Bankrupt about it.
4 Nov 2010	The appellant commenced divorce proceedings against the Bankrupt in Divorce Suit No 5600 of 2010.
22 Dec 2010	OSB 28/2010 was dismissed by an assistant registrar (‘the AR’).
29 Dec 2010	The Bank filed a bankruptcy application against the Bankrupt (‘the Bankruptcy Application’).
30 Dec 2010	The Bankruptcy Application was served personally on the Bankrupt at the matrimonial property, where the appellant was residing.
3 Jan...