Haw Par Brothers International Ltd v Overseas Textile Company Ltd

• Jurisdiction: Singapore
• Judgment Date: 07 March 1978
• Date: 07 March 1978
• Docket Number: Originating Summonses Nos 194 and
• Court: High Court (Singapore)

Haw Par Brothers International Ltd

Plaintiff

and

Overseas Textiles Co Ltd

Defendant

[1978] SGHC 12

Choor Singh J

Originating Summonses Nos 194 and 225 of 1977

High Court

Credit and Security–Charges–Floating charges–Appointment of receiver and manager–Priorities–Whether the holders of a crystallised floating charge had priority over a distraining landlord–Section 10 Distress Act (Cap 20, 1970 Rev Ed)–Landlord and Tenant–Distress for rent–Priority–Whether a distraining landlord had priority over the holders of a crystallised floating charge–Section 10 Distress Act (Cap 20, 1970 Rev Ed)

The applicant and the respondent each lay claim to property belonging to the debtor company. The applicant was a debenture holder, while the respondent was the landlord of the debtor company. The respondent had distrained the movable property of the debtor company for arrears of rent. It was argued by the applicant that upon the crystallisation of a floating charge, the debenture holder had priority over a distraining landlord.

Held, allowing the application:

(1) The rights of a distraining landlord are not greater than those of an unsecured execution creditor as against those of a debenture holder: at [20].

(2) Upon the appointment of the receiver and manager, the floating charge was crystallised, and all property covered by the charge became the property of the debenture holders. At the time of the distress, the property was in the possession of the debenture holders through the receiver and manager appointed by them. The applicant therefore had a prior right to the property: at [23] and [24].

Davey & Co v Williamson & Sons Ltd [1898] 2 QB 194 (refd)

Duck v Tower Galvanizing Co Ltd [1901] 2 KB 314 (refd)

Evans v Rival Granite Quarries [1910] 2 KB 979 (refd)

Harpur's Cycle Fittings Co, Re [1900] 2 Ch 731 (refd)

New City Constitutional Club Co, Re (1887) 34 Ch D 646 (refd)

Opera, Re [1891] 3 Ch 260 (refd)

Roundwood Colliery Co, Re [1897] 1 Ch 373 (distd)

Standard Manufacturing Co, Re [1891] 1 Ch 627 (refd)

Distress Act (Cap 20, 1970 Rev Ed) s 10 (consd)

Law of Distress Amendment Act 1908 (c 53) (UK)

Goh Heng Leong (Allen & Gledhill) for the receiver

A B Netto (Netto Low & Pang) for the applicant

Harry Elias (Drew & Napier) for Banque Nationale de Paris (debenture holder)

Wong Meng Meng (Lee & Lee) for Moscow Narodny Bank Ltd (debenture holder).

Choor Singh J

1 The point in issue to be determined in these two originating summonses which have been ordered to be heard together is whether the applicants as debenture holders have a prior right to the property of Overseas Textiles Co Ltd (“the Company”) which has been distrained upon by the respondents for rent due to them as landlords of the Company.

2 The facts briefly are these. Haw Par Brothers International Ltd (“the respondents”) are the landlords of Overseas Textiles Co Ltd. The Company has machinery and other movable property on the premises, Haw Par Industrial Building Number 2, Chia Ping Road, Jurong, Singapore, of which it is a tenant of the respondents under a lease for five years.

3 On 20 May 1977 the respondents were informed that a receiver and manager had been appointed of the Company on 17 May 1977 by debenture holders.

4 On 23 June 1977 the respondents made an ex parte application to the court in Originating Summons No 194 of 1977 for liberty to distrain the movable property found on the premises at Building Number 2, Chia Ping Road, Jurong, Singapore, for the sum of $79,200 being the amount of five months rent due to them from the Company. An order in terms of the application was made by the assistant registrar on the same day. On 24 June 1977 a writ of distress was issued by the court and executed by the sheriff on 25 June 1977 against the movable property of the Company found on the leasehold premises.

5 On 6 July 1977 the Banque Nationale de Paris, a debenture holder of the Company applied to the court for the writ of distress to be discharged or suspended and for the release of all the property distrained. A similar application was made in Originating Summons No 205 of 1977 by the Moscow Narodny Bank Ltd another debenture holder of the Company.

6 On 11 July 1977 the court ordered that the writ of distress be suspended and all the property distrained be released pending...