Fustar Chemicals Ltd (Hong Kong) v Liquidator of Fustar Chemicals Pte Ltd
Judge | Chan Sek Keong CJ |
Judgment Date | 30 July 2009 |
Neutral Citation | [2009] SGCA 35 |
Citation | [2009] SGCA 35 |
Court | Court of Three Judges (Singapore) |
Subject Matter | Liquidator's power to look behind documents,Insolvency Law,Duty of liquidator in voluntary winding up,Related party claiming proof of debt on basis of audit confirmations and audited accounts,Related company proving debt when primary supporting documents unavailable,Whether primary supporting documents of underlying transactions necessary for proof of debt,Members' voluntary winding up,Winding up,Whether liquidator should reject proof of debt when creditor was a related party unable to produce primary supporting documents of underlying transactions,Whether liquidator entitled to reject audited accounts as evidence of debt,Evidence,Proof of debt owed by related company,Proof of debt in winding up,Liquidator,Duty of liquidator to be fair and independent,Proof of evidence,Companies |
Defendant Counsel | Kannan Ramesh, Paul Seah and Joanna Poh (Tan Kok Quan Partnership) |
Published date | 03 August 2009 |
Plaintiff Counsel | Indranee Rajah SC and Daniel Tan (Drew and Napier LLC) |
30 July 2009 |
Judgment reserved. |
V K Rajah JA (delivering the judgment of the court):
Introduction
Background
6 NCL and WSW were married in 1976 but the marriage began to sour in 1993. WSW eventually filed a divorce petition in October 1996. The divorce proceedings were both protracted and acrimonious and resulted in several different lawsuits between NCL and WSW as well as the companies controlled by them. A decree nisi was finally granted in 2000. A detailed history of their legal skirmishes can be found in the case report of the ancillary proceedings in Wong Ser Wan v Ng Cheong Ling
7 The directors of the Company, WSW and NE, filed a Declaration of Solvency on 7 July 2004 (“the Declaration of Solvency”)[note: 1] affirming that its assets exceeded its liabilities. The Declaration of Solvency further stated it was a true and correct statement of the company’s assets and liabilities as at 31 March 2004. It listed under the Liabilities column “trade accounts” a sum of $691,088 owing to unsecured creditors. The individual identities of these unsecured creditors were however not disclosed. WSW and NE eventually passed a special resolution on 26 July 2004 to wind up the company. We pause here to make, what is in our view, a crucial observation. While FCL is the major creditor of the Company, WSW is on the flip side its major debtor. The Declaration of Solvency records the amount due from one of the Company’s director as $857,222. Counsel for OSH clarified at the hearing of this appeal in response to a query from us that this debt was actually due from WSW. It is not clear from the documents filed when and how WSW withdrew this amount from the Company. However, as the amount is not in dispute, we need say no more. What is material for the purposes of these proceedings is to point out that the amount due from WSW to the Company substantially exceeds the claim of FCL. It also bears mention that there is no evidence before us that this debt has been paid by WSW or collected by OSH. This state of affairs could give rise to the perception that OSH regarded her principal role as liquidator was to search for reasons to reject the proof of debt filed by FCL. We now turn to examine the basis for FCL’s proof of debt.
The proof of debt
10 OSH rejected FCL’s proof of debt on 3 July 2007. The following reasons were given:
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