Cheo Sharon Andriesz v Official Assignee of the estate of Andriesz Paul Matthew, a bankrupt

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 18 January 2013
• Neutral Citation: [2013] SGCA 8
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 49 of 2012
• Published date: 06 February 2013
• Year: 2013
• Hearing Date: 27 November 2012
• Plaintiff Counsel: Lim Seng Siew, Susan Tay and Ong Ying Ping (Ong Tay & Partners)
• Defendant Counsel: Lee Eng Beng SC, Chua Beng Chye, Raelene Su-Lin Pereira, Cheong Wei Yan Ginny and Matthew Teo (Rajah & Tann LLP)
• Subject Matter: Insolvency law,Bankruptcy,Bankruptcy effects
• Citation: [2013] SGCA 8

Andrew Phang Boon Leong JA (delivering the grounds of decision of the court): Introduction

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 No 35 Kew Drive, Singapore 466104 (“the matrimonial property”) and a condominium in Penang (“the Penang property”).

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

The facts

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 2011	The Bankrupt filed a notice of appeal against the AR’s decision in OSB 28/2010. As a result, the hearing of the Bankruptcy Application was adjourned.
27 Jan 2011	The Bankrupt’s appeal against the AR’s decision in OSB 28/2010 was dismissed.
1 Feb 2011	The appellant and the Bankrupt agreed to the ICJ in Divorce Suit No 5600 of 2010. The ICJ included the following terms:1 … (c)Subject to the bank’s [viz, United Overseas Bank Limited’s]2 approval, the [Bankrupt] shall transfer all his right, title and interest in [the matrimonial property] to the [appellant] within 4 weeks from the date of this Order without consideration and without the [appellant] refunding to the [Bankrupt’s] account with [the] Central Provident Fund Board. (d)The [Bankrupt] shall also transfer all his right, title and interest in … the Penang property … to the [appellant] within 4 weeks from the date of this Order without consideration. …
5 May 2011	A bankruptcy order was made against the Bankrupt.
16 May 2011	The Bankrupt filed his Statement of Affairs, which made no reference to his interest in the Properties.
2 Dec 2011	The appellant filed an application to enforce the ICJ. This application was adjourned pending the outcome of her application for ratification of the Disposition.
14 Feb 2012	The appellant applied for, inter alia, ratification of the Disposition. The respondent (viz, the Official Assignee of the Bankrupt’s estate) opposed the application, contending that the divorce proceedings were sham proceedings intended to put the Properties out of the reach of the creditors of the Bankrupt.

The decision below

In considering the appellant’s application for (inter alia) ratification of the Disposition, the Judge first set out the relevant provisions of the Act. Section 77(1) of the Act (“s 77(1)”) reads as follows:

Where a person is adjudged bankrupt, any disposition of property made by him during the period beginning with the day of the making of the bankruptcy application and ending with the making of the bankruptcy order shall be void except to the extent that such disposition has been made with the consent of, or been subsequently ratified by, the court. [emphasis added]

The period emphasised above in italics will be referred to as “the Relevant Period”. Section 77(3)(a) of the Act (“s 77(3)(a)”) provides as follows:

Nothing in this section shall give a remedy against any person in respect of — (a) any property or payment which he received from the bankrupt before the commencement of the bankruptcy in good faith, for value and without notice that the bankruptcy application had been made …

The Judge relied on the English High Court decision of In re Flint (A Bankrupt) [1993] Ch 319 (“Flint”), where s 284 of the Insolvency Act 1986 (c 45) (UK) (“the IA 1986”), which corresponds to s 77 of the Act, was considered, for the proposition 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) (see the GD at [17]). The Judge held that since the Bankrupt had attempted to give away his share of the Properties to the appellant by way of the ICJ during the Relevant Period, the Disposition was void unless it was ratified by the court (see the GD at [18]). The Judge declined to ratify the Disposition, concluding that much more was required of the appellant in order to persuade the court to ratify what appeared, without more, to have been an attempt to keep the Bankrupt’s interest in the Properties out of the reach of his creditors (see the GD at [37]).

The issues on appeal

The issues on appeal were as follows: whether s 77(1) applies to a disposition of property pursuant to a court order; whether the appellant falls within s 77(3)(a); and whether this court should ratify the Disposition.

It is interesting to note that in the court below, both the appellant and the respondent accepted Flint as being dispositive of the first issue above. Not surprisingly, perhaps, the Judge therefore merely referred to this particular issue in a single paragraph, relying (as noted above at [6]) on 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” for the purposes of s 77(1) (see the GD at [17]). However, in the present appeal, the appellant mounted a root-and-branch attack on (in particular) Flint. Indeed, the respondent, in its written case for this appeal, observed (correctly, in our view) that “[t]he vanguard of the [a]ppellant’s case [was] that [the Judge] had wrongly applied Flint”³ [emphasis in original omitted]. As we shall see in a moment, this particular issue is, as a result, the focus of the present grounds of decision as well.

Our decision

In our view, s 77(1) applies to a disposition of property pursuant to a court order. Before proceeding to set out our reasons for arriving at this decision, we shall deal briefly with the two remaining issues listed at [7] above. The facts of this case are quite stark. For the reasons provided by the Judge in the GD (which we do not propose to repeat), we found that 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, as well as the reasons detailed in the GD, we were not prepared to ratify the Disposition.

Turning now to the scope of s 77(1), the appellant’s main submission was that s 77(1) was “confined to dispositions voluntarily carried out by the bankrupt, not when [they were] carried out under compulsion of an order of court”⁴ [emphasis in original]. In support of this submission, the appellant argued that: (a) Flint should not be applied in Singapore; (b) as a matter of statutory interpretation, s 77(1) did not apply to a disposition pursuant to a court order; and (c) the proper statutory provision to use to invalidate the Disposition was s 73B of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) (“the CLPA”).

In so far as the first argument was concerned, the appellant argued that the court in Flint, in arriving at its decision, “relied principally”⁵ on an earlier case, In re Abbott (A Bankrupt), Ex parte Trustee of the Property of the Bankrupt v Abbott (PM) [1983] Ch 45 (“Abbott”), which was concerned with two English statutory provisions, namely, s 42 of the Bankruptcy Act 1914 (c 59) (UK) (“the BA 1914”) and s 39 of the Matrimonial Causes Act 1973 (c 18) (UK) (“the MCA 1973”). The relevant portions of s 42 of the BA 1914 provide as follows: (1) Any settlement of property, not being a settlement … made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, … shall, if the settlor becomes bankrupt within two years after the date of the settlement, be void against the trustee in bankruptcy …

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(4) “Settlement” shall, for the purposes of this section, include any conveyance or transfer of property.

As for s 39 of the MCA 1973, at the time Abbott was decided, it provided as follows:

The fact that a settlement or transfer of property had to be made in order to comply with a property adjustment order shall not prevent that settlement or transfer from being a settlement of property to which section 42(1) of the Bankruptcy Act 1914 (avoidance of certain settlements)...