Eastern Pretech Pte Ltd v Kin Lin Builders Pte Ltd

• Judge: Andrew Ang JC
• Judgment Date: 03 September 2004
• Neutral Citation: [2004] SGHC 195
• Citation: [2004] SGHC 195
• Court: High Court (Singapore)
• Published date: 06 September 2004
• Plaintiff Counsel: Sim Chee Siong, Edwin Lee and Kirindeep Singh (Rajah and Tann)
• Defendant Counsel: Tang Yock Miin (Gurbani and Co),Troy Yeo (K K Yap and Partners) and Ratanesh Bal (Straits Law Practice LLC),L Dason (Khoo Ng and Partners),Lee Hwai Bin and Ian de Vaz (Wong Partnership),Chia Ho Choon (Khattar Wong and Partners),Martin F Decruz (Ang and Lee),Andrew Ang and Allister Lim Wee Sing (PK Wong and Associates LLC),Toh Hwee Lian
• Subject Matter: Companies,Winding up,Whether winding up order to be set aside where company intended to file application for scheme of arrangement.,Whether to allow substitution of petitioning creditor.

3 September 2004

Andrew Ang JC:

1 This originated as a winding up petition filed by Ligent Engineering Pte Ltd (“the petitioning creditor”) to whom Kin Lin Builders Pte Ltd (“the Company”) owed $18,000 arising from dishonoured cheques issued by the Company to the petitioning creditor. A statutory demand had been served on the Company at its registered office on 21 April 2004 and the Company had failed to meet the demand.

2 At the hearing of the Winding Up Petition on 18 June 2004, counsel for the Company sought an adjournment saying that the debt was disputed and that the Company would be filing a counterclaim but that there were voluminous papers he had to go through which he had received only three days earlier. No affidavit had been filed to oppose the petition. The application to adjourn was opposed by counsel for the petitioning creditor who asserted that counsel for the Company had been acting since 24 May 2004 and that the alleged counterclaim was not bona fide. I noted that there were supporting creditors so that even if the debt owed to the petitioning creditor was disputed on substantial grounds, the Company would still be faced with other creditors, including a judgment creditor. The response of counsel for the Company was that it was seeking to set aside the default judgment. In the absence of a substantial defence or cross-claim and being of the view that the application for adjournment was only to delay the winding up, I ordered that the Company be wound up.

3 Counsel for the Company then wrote in for further arguments and took out an application in Summons in Chambers No 3422 of 2004 which, amongst other things, sought leave of court to add two shareholders of the Company in the proceedings to oppose the winding up. At the hearing (on 25 June 2004) leave was granted for the two shareholders to appear. In his affidavit filed on 23 June 2004, in support of the summons in chambers application, Jong Huen Shin (“Jong”) (a director and shareholder of the Company) deposed that the Company would be seeking, within a week, to apply for a judicial management order with a view to proposing a scheme of arrangement. He also painted a rosy picture saying that the Company expected “another $2m to come in from completed projects and on-coming projects within the next three to six months”. He also contended that two of the biggest creditors of the Company, Bintai Kindenko Pte Ltd (“Bintai”) (which was owed more than $1m) and Eastern Pretech Pte Ltd (“Eastern”) (which was owed $1.5m) had not opposed an adjournment at the first hearing, in order for a scheme of arrangement to be proposed. As regards the debt owed to the petitioning creditor, he deposed that he would use his own funds to settle the debt.

4 Respective counsel for the creditors wanted a clearer picture of what the prospective scheme of arrangement would offer them so that their clients could make an informed decision. Thus, for example, if the petitioning creditor was indeed paid off, the supporting creditors would have to decide whether any of them would be prepared to step in as a substitute petitioning creditor. For this reason, by consent, the hearing of further arguments was adjourned to 7 July 2004. Meanwhile, I made an order under s 279(1) of the Companies Act (Cap 50, 1994 Rev Ed) staying all proceedings in relation to the winding up until the hearing on 7 July 2004, save and except that all parties were to be at liberty to file affidavits for the hearing.

5 By the date of the hearing on 7 July 2004, no further information had been furnished by the Company. However, counsel for the Company sought a further adjournment by consent and informed the court that it intended to file an application for a scheme of arrangement. As there was doubt whether the scheme of arrangement could be applied for while the winding up order was extant, I directed...