Excalibur Group Pte Ltd v Goh Boon Kok

• Jurisdiction: Singapore
• Judge: Quentin Loh J
• Judgment Date: 05 April 2012
• Neutral Citation: [2012] SGHC 71
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 636 of 2011
• Year: 2012
• Published date: 10 April 2012
• Hearing Date: 15 November 2011
• Plaintiff Counsel: S Palaniappan and Ramesh Bharani Nagaratnam (Straits Law Practice LLC)
• Defendant Counsel: Adrian Tan and Lawrence Tan (Eldan Law LLP)
• Subject Matter: Insolvency Law,Winding Up,Liquidator,Leave to commence action against liquidator
• Citation: [2012] SGHC 71

Quentin Loh J: Introduction

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.¹ The plaintiff has also prayed that leave be granted for the plaintiff to continue its action if leave is required.² The plaintiff has already commenced proceedings against the defendant in Suit No 162 of 2011 (S162/2011).³

Background The plaintiff’s affidavit in support of this application

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.

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.⁴ The application was heard and granted by Woo Bih Li JC on 11 January 2002.⁵ The defendant was appointed as the liquidator.⁶

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 5643M together with the uncompleted building erected on 10 Kaki Bukit Industrial Terrace Singapore 471819 (“the Property”).⁷ 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”).⁸ The plaintiff submitted a tender in the sum of $5,318,000 and paid the sum of $800,000 as a tender fee.⁹ Fiordland submitted a tender in the sum of $7,238,000 and also paid a tender fee of $300,000.¹⁰

The plaintiff was later informed on 8 January 2003 that the two tenders were rejected.¹¹ It claims to have subsequently found out that the tender was awarded to M/s Wellsprings Properties Pte Ltd (“Wellsprings”).¹² Wellsprings had submitted a tender in the sum of $8,200,818.¹³

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 2004.¹⁴ The plaintiff found out about this through Loh who was, at the material time, engaged as the defendant’s personal assistant.¹⁵ The plaintiff claims that Loh discovered the following invoices at the defendant’s offices while assisting the defendant:¹⁶ An invoice dated 16 November 2003 from M/s K S Resource & Management Services (“K S Resource”) to Wellsprings for the total sum of $75,000. According to the plaintiff, this was purportedly a “finder’s fee” for identifying and securing the Property for Wellsprings. A completion account and mode of disbursement for the sale of the Property was attached to the invoice. The plaintiff alleges that it was apparent from the defendant’s handwritten notes on the invoice that he had acknowledged receipt of $30,000 on 10 March 2004 and $120,000 on 28 September 2004. An invoice dated 31 December 2004 from K S Resource to Peh Lee Construction Pte Ltd for the total sum of $44,000. According to the plaintiff, this was purportedly a consultancy fee for wall cladding and the provision of quality control services. An invoice dated 3 January 2005 from K S Resource to Wellsprings for the total sum of $76,000. According to the plaintiff, this was purportedly a consultancy fee for an investment at Xiamen, China. A handwritten note in relation to the contents of the 31 December 2004 invoice and the 3 January 2005 invoice.

The plaintiff’s representative deposed that K S Resource is a sole proprietorship owned by one Mdm Goh Yang Soo, who the plaintiff understands to be the defendant’s “common law wife”.¹⁷ Consequently, the plaintiff believes that the defendant and/or his proxies had been paid secret commissions in the sum of $270,000 to award the tender to Wellsprings.¹⁸

As a result of the foregoing, the plaintiff commenced an action against the defendant in S162/2011.¹⁹ In this action, the plaintiff has alleged that the defendant was, at the material time, the controlling mind, will, alter ego and/or the agent of the Company.²⁰ It has also alleged that the defendant breached the contract between the plaintiff and the company, induced the breach of this contract, breached the plaintiff’s legitimate expectation that the tender process for the sale of the property would be conducted in good faith, committed fraud by receiving secret commissions from Wellsprings to award a tender to it, and/or breached his common law duty of care, which he owed to all the bidders of the Property, to treat all bidders fairly and equally.²¹

On 25 April 2011, the defendant filed an application to strike out the plaintiff’s statement of claim in S162/2011.²² In support of this application, the defendant had deposed that the plaintiffs’ causes of action in tort and contract were time barred.²³ It was also alleged that the court’s leave should have been obtained before commencing S162/2011.²⁴

The plaintiff’s representative has deposed that he believes and has been advised that there was no need to seek the court’s leave before commencing S162/2011.²⁵ However, if leave was required, he asserted that leave should be granted because there is a prima facie case against the defendant.²⁶

The defendant’s reply affidavit

The defendant pointed out that the plaintiff took out a similar application in Summons No 600093 of 2011 (“SUM600093/2011”) for leave of court on 30 May 2011.²⁷ I heard that application. I voiced my view that there were procedural irregularities in that application. On 26 July 2011, the plaintiff sought and obtained leave from me to withdraw that application.²⁸

The defendant referred to and incorporated his reply affidavit for SUM600093/2011 in his reply affidavit for the present application.²⁹ In his reply affidavit for SUM600093/2011, the defendant deposed that the tender was awarded to Wellsprings which had submitted the highest bid.³⁰ The defendant referred to the affidavit that he had filed in support of his application to strike out the plaintiff’s statement of claim in S162/2011. The plaintiff had deposed that, as a court-appointed liquidator, he was an officer of the court.³¹ Hence, leave of the court should have been obtained before commencing the action.³² The defendant also asserted that the plaintiff has not managed to establish a prima facie case against him that would warrant the grant of the court’s leave.³³ The defendant maintained that the plaintiff has made unfounded allegations which have been categorically denied.³⁴

Issues

The following issues arise for my consideration: Does the Companies Act (Cap 50, 2006 Rev Ed) (“CA”) and Companies (Winding Up) Rules (Cap 50, R 1, 2006 Rev Ed) (“C(WU)R”) require a plaintiff to obtain the court’s leave before commencing an action against a liquidator of a company (“Issue 1”)? If not, is there a common law rule to that effect (“Issue 2”)? If there is such a common law rule, can leave be granted retrospectively (“Issue 3”)? The relevance of this issue is that the plaintiff has already commenced action against the defendant (see [1] above). If so, should leave be granted (“Issue 4”)?

My decision Issue 1: Does the CA and the C(WU)R require a plaintiff to obtain the court’s leave before commencing an action against a liquidator of a company?

Neither the CA nor the C(WU)R requires a plaintiff to seek the court’s leave before suing a liquidator. In passing, however, I should highlight three provisions in the CA concerning the legal liabilities of liquidators. The first is s 265 of the CA which provides for the Official Receiver to have oversight over private liquidators (see s 265 of the CA):

Control of unofficial liquidators by Official Receiver

265.—(1) Where in the winding up of a company by the Court, a person, other than the Official Receiver, is the liquidator the Official Receiver shall take cognizance of his conduct and if the liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by any written law or otherwise with respect to the performance of his duties, or if any complaint is made to the Official Receiver by any creditor or contributory in regard thereto, the Official Receiver shall inquire into the matter, and take such action thereon as he may think expedient.

(2) The Official Receiver may at any time require any such liquidator of a company which is being wound up by the Court to answer any inquiry in relation to any winding up in which he is engaged and may, if the Official Receiver thinks fit, apply to the Court to examine him or any other person on oath concerning the winding up. (3) The Official Receiver may also direct a local investigation to be made of the books and vouchers of such liquidator. The second provision is s 313(2) of the CA which provides that the court is to take cognizance of the conduct of liquidators: Control of Court over liquidators (2) The Court shall take cognizance of the conduct of liquidators, and if a liquidator does not faithfully perform his duties and observe the prescribed requirements or the requirements of the Court or if any complaint is made to the Court by any creditor or contributory or by the Official Receiver in regard thereto, the Court shall inquire into the matter and take such action as it thinks fit. The third provision is s 341 of the CA which confers the court with the power to assess damages against, inter alia, a liquidator: Power of Court to assess damages against delinquent officers, etc. 341.—(1) If, in the course of winding up, it appears that any person who has taken part in the formation or promotion of the...