Excalibur Group Pte Ltd v Goh Boon Kok

• Jurisdiction: Singapore
• Judgment Date: 05 April 2012
• Date: 05 April 2012
• Docket Number: Originating Summons No 636 of 2011
• Court: High Court (Singapore)

Excalibur Group Pte Ltd

Plaintiff

and

Goh Boon Kok

Defendant

[2012] SGHC 71

Quentin Loh J

Originating Summons No 636 of 2011

High Court

Companies—Winding up—Leave of court to sue liquidator—Plaintiff submitting tender to purchase property belonging to company—Plaintiff failing in tender—Plaintiff claiming that winner of tender paid secret commissions to liquidator—Plaintiff commencing action against liquidator—Plaintiff subsequently seeking declaration as to whether leave of court was required to sue liquidator—Whether leave of court was required to sue liquidator—Whether leave of court might be obtained retrospectively

The defendant was appointed as the liquidator of Kaki Bukit Industrial Park Pte Ltd (‘the Company’). According to the plaintiff, the defendant, in his capacity as liquidator of the Company, invited parties to tender for the purchase of a property belonging to the Company. The plaintiff submitted two tenders. Those tenders were rejected. The plaintiff claims to have subsequently found out that the party who won the tender had paid secret commissions to the defendant. The plaintiff then commenced an action against the defendant in Suit No 162 of 2011 (‘S 162/2011’).

The plaintiff subsequently took out the present application for a declaration as to whether leave of court was required before commencing an action against the defendant in his capacity as the liquidator of the Company in relation to the administration of the affairs of the Company or otherwise in relation to his conduct as the Company's liquidator. The plaintiff also prayed that leave be granted for the plaintiff to continue its action if leave was required.

Held, granting the application:

(1) Neither the Companies Act (Cap 50, 2006 Rev Ed) nor the Companies (Winding Up) Rules (Cap 50, R 1, 2006 Rev Ed) required a plaintiff to seek the court's leave before suing a liquidator: at [14].

(2) The Australian and Malaysian positions that leave of court was required in order to commence proceedings against a liquidator should be followed in Singapore. A common law requirement for leave would promote the desirable objective of ensuring that the winding-up process was conducted efficiently and expeditiously in the interest of all stakeholders. A requirement for leave would ensure that frivolous claims were weeded out at the outset. This would avoid unnecessary and expensive legal proceedings: at [28].

(3) Leave might be obtained retrospectively. The purpose of the requirement for leave was to ensure that the winding-up process was carried out expeditiously and efficiently and to sieve out claims that were without merit or aimed at delaying the liquidation process. That purpose would not be served by holding that leave could only be granted if it was applied for prospectively: at [33].

(4) All the facts and circumstances of the case had to be taken into consideration when deciding whether to grant leave. Hard and fast rules should not be laid down. The applicant had to at least be able to show a prima facie arguable case. An applicant need not go so far as to show he would or was likely to succeed. Applications without any foundation or that were frivolous or vexatious or calculated to delay proceedings or with an ulterior motive would not be allowed. The stage at which the proceedings were when such applications were made would also be a very relevant consideration. Delays in taking out such applications, unless there were good reasons, would also weigh against an applicant: at [35].

(5) In the context of the present application, the Company had already been wound up. There was, accordingly, no purpose to be served by withholding leave to commence any action against the defendant. The rationale for the requirement of leave was to ensure that the winding-up process was conducted expeditiously and efficiently for the benefit of all the stakeholders in the company. In these circumstances, it was not necessary to set the threshold for leave at a high level. Proceeding only on the basis of the evidence before the court, the plaintiff had a prima facie arguable case against the liquidator. Hence, the plaintiff was granted retrospective leave to commence S 162/2011: at [37].

Abric Project Management Sdn Bhd v Palmshine Plaza Sdn Bhd [2007] 3 MLJ 571 (refd)

Armitage v Gainsborough Properties Pty Ltd [2011] VSC 419 (refd)

Baxter v Hamilton [2005] TASSC 64 (refd)

Biposo Pty Ltd, Re; Condon v Rodgers (2 August 1995) (Supreme Court of New South Wales; Young J) (refd)

Chi Liung Holdings Sdn Bhd v Ng Pyak Yeow [1995] 3 MLJ 204 (refd)

Chin Cheen Foh v Ong Tee Chew [2003] 3 MLJ 57 (refd)

John Patrick Mc Gowan v Michael Chadwick [2002] EWCA Civ 1758 (refd)

Jumabhoy Rafiq v Scotts Investment (Singapore) Pte Ltd [2003] 2 SLR (R) 422; [2003] 2 SLR 422 (refd)

Korea Asset Management Corp v Daewoo Singapore Pte Ltd [2004] 1 SLR (R) 671; [2004] 1 SLR 671 (refd)

Maidstone Palace of Varieties Ltd, Re [1909] 2 Ch 283 (refd)

Mamone v Pantzer [2001] NSWSC 26 (refd)

Mc Donald v Dare [2001] QSC 405 (refd)

Ong Thiam Huat, Trustee of Estate of v Chan Hock Seng [2004] SGHC 232 (refd)

Roger James Weston v Sara Elizabeth Dayman [2006] EWCA Civ 1165 (refd)

See Teow Guan v Kian Joo Holdings Sdn Bhd [2010] 1 MLJ 547 (refd)

Siromath Pty Ltd [No 3] , Re (1991) 25 NSWLR 25 (refd)

Sydlow Pty Ltd (in liquidation) v TGKotselas Pty Ltd (1996) 144 ALR 159 (refd)

Companies Act (Cap 50, 2006 Rev Ed) ss 262 (3) , 265, 272 (3) , 313 (2) , 341

Companies (Winding Up) Rules (Cap 50, R 1, 2006 Rev Ed)

Legal Profession Act (Cap 161, 2009 Rev Ed) s 82 (1)

Bankruptcy and Insolvency Act (RSC 1985, c B-3) (Can) s 215

Companies Act 1965 (Act 125) (Mal) s 236 (3)

S Palaniappan and Ramesh Bharani Nagaratnam (Straits Law Practice LLC) for the plaintiff

Adrian Tan and Lawrence Tan (Eldan Law LLP) for the defendant.

Judgment reserved.

Quentin Loh J

Introduction

1 This is an application by the plaintiff, Excalibur Group Pte Ltd, for a declaration as to whether leave of court is required before commencing an action against the defendant, Goh Boon Kok, in his capacity as the liquidator of Kaki Bukit Industrial Park Pte Ltd (‘the Company’) in relation to the administration of the affairs of the Company or otherwise in relation to his conduct as the Company's liquidator. The plaintiff has also prayed that leave be granted for the plaintiff to continue its action if leave is required. The plaintiff has already commenced proceedings against the defendant in Suit No 162 of 2011 (‘S 162/2011’).

Background

The plaintiff's affidavit in support of this application

2 One of the plaintiff's directors and shareholders, Lawrence Leow Chin Hin, filed an affidavit in support of this application. The following background facts and assertions are taken from this affidavit.

3 On or about the end of 2001, one Loh Lin Kett (‘Loh’), trading as L K Loh Construction Company, applied to wind up the Company. The application was heard and granted by Woo Bih Li JC on 11 January 2002. The defendant was appointed as the liquidator.

4 According to the plaintiff, on or about 8 November 2002, the defendant, in his capacity as the liquidator of the Company, invited parties to tender for the purchase of the whole of Lot 5643 M together with the uncompleted building erected on 10 Kaki Bukit Industrial Terrace Singapore 471819 (‘the Property’). On 7 January 2003, the plaintiff submitted two tenders, one in its name and the other in the name of an associated company, M/s Fiordland Pte Ltd (‘Fiordland’). The plaintiff submitted a tender in the sum of $5,318,000 and paid the sum of $800,000 as a tender fee. Fiordland submitted a tender in the sum of $7,238,000 and also paid a tender fee of $300,000.

5 The plaintiff was later informed on 8 January 2003 that the two tenders were rejected. It claims to have subsequently found out that the tender was awarded to M/s Wellsprings Properties Pte Ltd (‘Wellsprings’). Wellsprings had submitted a tender in the sum of $8,200,818.

6 The plaintiff claims that on or about October 2009, it came to Loh's knowledge that Wellsprings had paid secret commissions in the amount of $270,000 to the defendant in 2004. The plaintiff found out about this through Loh who was, at the material time, engaged as the defendant's personal assistant. The plaintiff claims that Loh...