Chuan & Company Pte Ltd v Ong Soon Huat

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 05 April 2003
• Neutral Citation: [2003] SGCA 15
• Citation: [2003] SGCA 15
• Defendant Counsel: Philip Fong, Josephine Choo (Harry Elias Partnership)
• Published date: 17 December 2003
• Plaintiff Counsel: Aqbal Singh (Unilegal LLC)
• Date: 05 April 2003
• Docket Number: Civil Appeal No 118 of 2002
• Court: Court of Appeal (Singapore)
• Subject Matter: Effect of acknowledgment of time-barred claim,Limitation Act (Cap 163, 1996 Rev Ed) ss 26, 27,'Made to',Whether creditor entitled to rely on letter as acknowledgement,Whether there was acknowledgement,'Acknowledgment',Inclusion of disputed sum in estate duty affidavit,Words and Phrases,Debtor referred to sum as an 'alleged' debt,Limitation Act (Cap 163, 1996 Rev Ed) ss 26(2), 28(5),Limitation of Actions,Limitation Act (Cap 163, 1996 Rev Ed) s 27(2),Acknowledgment of debt,Limitation Act (Cap 163, 1996 Rev Ed) s 27,Whether claim may be acknowledged after it is time-barred

Delivered by Chao Hick Tin JA

1 This appeal raises the question whether the present action instituted by the plaintiff-appellant against the defendant-respondent for the recovery of a sum of $7,164,304.64 has become time-barred. This question in turn rests upon the question whether two documents emanating from the respondent constitute "acknowledgment’ within the meaning of s 27 of the Limitation Act (the Act).

The background

2 The appellant, Chuan & Company Pte Ltd (Chuan), is a family company, now under voluntary liquidation. It was formed by one Ong Toh. Before its incorporation, it was run by him as a sole proprietorship for some twenty years.

3 Ong Toh passed away on 30 March 1995 and the respondent, Ong Soon Huat, a nephew of his, is the executor of his estate.

4 During his lifetime, Ong Toh dealt with the assets of Chuan as if they were his own. Even after he had on 26 November 1990 transferred all his shares in Chuan to his two daughters (Ms Ong Kim Hong and Ms Ong Thian Hong) by his third wife, and had ceased to be a director, he continued to treat the property of Chuan in any way he pleased. He simply withdrew money from Chuan.

5 From 1987, Ong Toh would acknowledge the moneys taken by him from Chuan by signing on the yearly confirmation of debts statements sent to him by the company auditors, Chan Hock Seng & Company. The last statement of debts was signed by him on 10 March 1994, where he acknowledged owing Chuan the sum of $7,164,304.64. This is the sum which the liquidator of Chuan is seeking to claim back from the estate of Ong Toh in this action.

6 On 9 December 1995, the executor filed an estate duty affidavit with the Estate Duty Department (EDD) in which the said sum was included as a debt owed by the estate to Chuan.

7 On 17 January 2001, pursuant to a request of EDD, the executor’s solicitors wrote to Chuan’s auditors asking for copies of documents relating to the alleged debt. The relevant parts of the letter read:-

2. We recently took over conduct of the matter … and we would be grateful if you could assist us with queries from the Commissioner of Estate Duties.

3. First, the Commissioner has asked for documents in support of:-

....

....

(ii) Chuan & Co Pte Ltd’s allegation that a debt of $7,164,304.64 was owing by the deceased to the company as at 30 March 1995.

4. Without such documents, the Commissioner will refuse to make a deduction for the alleged debts. In the circumstances, please let us have copies of all the documents substantiating the alleged debts…

The documents requested in the letter were duly furnished by Chuan.

Decision below

8 At the request of the parties, the court below decided, before commencing trial, to determine the question as to whether the claim by Chuan had become time-barred as a preliminary question. The judge ruled that the claim was barred by limitation on 10 March 2000, six years from the date Ong Toh signed the last statement of debts. She held that neither the estate duty affidavit nor the letter of 17 January 2001 constituted an acknowledgement of a debt within the meaning of s 27 of the Limitation Act.

The statutory provisions

9 Section 6(1)(a) of the Limitation Act provides that an action founded on a contract or on tort "shall not be brought after the expiration of six years from the date on which the cause of action accrued." However, s 26(2) provides that where the person liable for any debt "acknowledges the claim or makes any payment in respect thereof" the right of action to recover the debt shall be deemed to have accrued on the date of the acknowledgement.

10 What would constitute an acknowledgement is prescribed in s 27, and as this question is central to the issue before us, we shall set out the provisions in full:-

27(1) Every such acknowledgment as is referred to in section 26 shall be in writing and signed by the person making the acknowledgment.

(2) Any such acknowledgment or payment as is referred to in section 26 may be made by the agent of the person by whom it is required to be made under that section, and shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.

Estate duty affidavit

11 We shall first examine the estate duty affidavit. In the schedule to the affidavit filed by Ong Soon Huat, the sum of $7,164,304.64 was listed as a debt owing by Ong Toh to Chuan. What needs to be determined is whether the affidavit can be considered to be an acknowledgment of the debt "made to (Chuan) or to an agent of (Chuan)" within the meaning of s 27(2).

12 Chuan accepts that to constitute an "acknowledgment" there must be a clear admission of liability. Relying upon Bank of America National Trust Savings Association v Cheong Hoon Choy [1982] SLR 60, Chuan argues that it does not matter that the affidavit was not, according to its terms, expressly or impliedly, addressed to Chuan, so long as it was "delivered to the creditor or his agent by or with the authority of the debtor or his agent." The fact that the acknowledgment was addressed to a third party, the Commissioner of Estate Duties, instead of Chuan, is not necessarily an impediment to it being an effective acknowledgment.

13 In Bank of America National Trust Savings Association v Cheong Hoon Choy, the defendant executed a charge over a property owned by him and another person, who had become a bankrupt, to secure overdraft and other facilities granted to that other person. In May 1973, the Official Assignee at Kuala Lumpur paid, on behalf of the defendant and the bankrupt, the sum of M$140,000 to the plaintiffs on the understanding that the charge executed by the defendant would be released. Later the plaintiff claimed the balance sum of M$70,454.43 from the defendant. One of the defences raised was that the claim was time-barred. In response, the plaintiff averred that there was an acknowledgement of the debt by the defendant in April 1973 when the defendant’s solicitors wrote to the Official Assignee. The relevant part of the letter read:-

The aforesaid land is charged in favour of Bank of America … and the amount outstanding to-date is $206,029.69. We understand that you are in the process of selling the said bankrupt’s half share in the said land for redemption of the said charge.

Kindly withhold further action in the proposed sale as our client is able to obtain a better offer …

It is significant to note that this letter was specifically copied to and was received by the plaintiff’s solicitors in Kuala Lumpur.

14 There, it was contended that the letter did not amount to an acknowledgement under s 27(2) because it was not addressed to the plaintiff or its agent, and the Official Assignee was not an agent of the Bank. However, as the letter had expressly acknowledged the debt, and a copy of the letter was sent to the plaintiff’s solicitors, the court held that the letter would constitute a sufficient acknowledgement for the purpose of s 27(2).

15 In coming to its decision, the court there had relied on the English case of Re Compania de Electricidad de la Provincia De Buenos Aires Ltd [1980] CH 146 where Slade J, after noting that there did not appear to be any authority on the meaning of the expression "made to the person, or to an agent of the person, whose title or claim is being acknowledged", enunciated the following proposition (at 193):-

.. a written acknowledgment cannot be said to be "made to" a creditor or his agent, within the meaning of section 24(2) unless either (a) it is delivered to the creditor or his agent by or with the authority of the debtor or his agent or (b) it is expressly or implicitly addressed to and is actually received by the creditor or his agent.

In my judgment, in case (a) it would not matter that the acknowledgment was not, according to its terms, expressly or implicitly addressed to the recipient. In case (b) it would not matter that the acknowledgment reached the hands of the creditor otherwise than by or with the authority of the debtor. In either case, however, it would be necessary that the creditor should actually receive the acknowledgment before he could rely on it.

A company’s balance sheet must in my judgment be regarded as implicitly addressed to (among other persons) those creditors whose debts are referred to in it. It follows that in my judgment, as Miss Arden submitted, and, as I understood him, Mr Sykes did not contend to the contrary, an effective "acknowledgment" of a debt must be said to have been "made" by the company to any creditor who can establish by appropriate evidence that (i) he has actually received, from whatever source, a copy of a balance sheet of the company, signed by directors of the company and referring to "sundry creditors"; (ii) he is one of the "sundry creditors" so referred to. In such circumstances the balance sheet of the company would constitute an effective acknowledgment of the relevant debt, not as at the date on which it was actually signed by the directors or received by the creditor, but as at the date of the balance sheet, being the date to which the signature of the directors related; and the cause of action would be deemed to have accrued at that date:…

16 However, the fact situation in the present case is not the same as that in Cheong Hoon Choy, where the letter in question was copied to the creditor’s solicitors and was in fact received. Here, the estate duty affidavit was not "made to" Chuan or its solicitors. It was addressed to the Commissioner of Estate Duties. It was never received by Chuan or its solicitors. The executor even refused to give a copy of it to Chuan’s solicitors when requested. Chuan only secured a copy by virtue of an order of court obtained...