Heince Tombak Simanjuntak and others v Paulus Tannos and others

• Jurisdiction: Singapore
• Judge: Aedit Abdullah J
• Judgment Date: 18 September 2019
• Neutral Citation: [2019] SGHC 216
• Plaintiff Counsel: For Summons Nos 903 and 1188 of 2018: Ho Pei Shien Melanie, Chang Man Phing Jenny, and Wan Rui Jie Erwin (WongPartnership LLP)
• Date: 18 September 2019
• Docket Number: Originating Summons No 71 of 2018 (Summons Nos 903 and 1188 of 2018, Summons No 2381 of 2019)
• Hearing Date: 03 May 2018,06 March 2019,14 January 2019,06 August 2019,16 July 2019
• Subject Matter: Foreign judgments,Recognition,Conflict of Laws
• Published date: 24 September 2019
• Defendant Counsel: Govintharash s/o Ramanathan, Cham Shan Jie Mark and Isabel Lim (Gurbani & Co LLC),Philip Antony Jeyaretnam SC and Lau Wen Jin (Dentons Rodyk & Davidson LLP),K Nair Chandra Mohan (Tan, Rajah & Cheah)
• Court: High Court (Singapore)
• Citation: [2019] SGHC 216
• Year: 2019

Aedit Abdullah J: Introduction

The present case concerned the recognition of foreign personal bankruptcy orders under the common law. The applicants, who are receivers and administrators appointed under Indonesian law, originally obtained recognition of Indonesian bankruptcy orders made against the four respondents, Paulus Tannos (“the 1st Respondent”), Lina Rawung (“the 2nd Respondent”), Pauline Tannos (“the 3rd Respondent”), and Catherine Tannos (“the 4th Respondent”). The respondents then sought the setting aside of the recognition order. Some time was taken to confirm the state of proceedings in Indonesia. These grounds will focus on the respondents’ application for setting aside.

These proceedings demonstrated that there may be some room for a regional recognition regime or common approach as not all issues may be resolved by the UNCITRAL Model Law on Cross-Border Insolvency (“the Model Law”), even if it were extended in Singapore to include personal bankruptcy orders.

Background

The present proceedings were commenced arising out of bankruptcy and insolvency orders made in Indonesia against the Respondents, as well as a company with which they were connected, PT Megalestari Unggul.¹ The participation of the Respondents in those proceedings was disputed.

In any event, the Indonesian proceedings culminated in orders for: A moratorium on debt repayment (alternatively termed a suspension of debt payment obligations), the Penundaan Kewajiban Pembarayan Utaang (“PKPU”), dated 9 January 2017.² A bankruptcy order against the Respondents dated 22 February 2017.³ The appointment of an additional receiver and administrator on 17 April 2017.⁴ I will refer to these collectively as the “Indonesian Bankruptcy Orders”.

On the filing of Originating Summons No 71 of 2018 by the Applicants, recognition was granted to the Indonesian Bankruptcy Orders in an ex parte hearing, with the Applicants being empowered to administer, realise and distribute the Respondents’ property in Singapore. The Respondents subsequently filed Summons No 903 of 2018 and Summons No 1188 of 2018 to set aside the orders granting recognition of and assistance to the Appellants.

Summary of the Applicants’ arguments

The Applicants argued that the Indonesian Bankruptcy Orders appointing them as receivers and administrators of the Respondents should be recognised as the common law requirements were met. They were final and conclusive, being judgments of a court which had jurisdiction according to Singapore private international law rules, and no defences applied against recognition.⁵

Here, the Indonesian Bankruptcy Orders were final and conclusive, as no pending judicial review or appeals against them were in place. It was unclear from the evidence adduced by the Respondents that there was any appeal extant.⁶ In any event, any such review or appeal was impermissible under Indonesian law.⁷

The Respondents had submitted to the jurisdiction of the Commercial Court of the Central Jakarta District Court (“the Indonesian Court”), which granted the Indonesian Bankruptcy Orders. The respondents had notice of the proceedings and had participated in the process.⁸

No defences applied to the recognition of the Indonesian Bankruptcy Orders. While the Respondents had alleged that the deeds of personal guarantee were fraudulent, they had actually affirmed these guarantees during the proceedings, and the Indonesian Court had in fact verified those guarantees.⁹

The applicants also objected to any interim stay being granted on the basis that there was no stay in place for the Indonesian Bankruptcy Orders. The Respondents were also highly likely to dissipate their assets within Singapore.¹⁰

Summary of the Respondents’ arguments

The respondents argued for the setting aside of the original recognition order, and argued as well that the Court should not recognise the Indonesian Bankruptcy Orders.

The Indonesian Bankruptcy Orders had been obtained fraudulently and in breach of natural justice.¹¹ Apart from these, the respondents also raised several alleged instances of failure by the applicants to provide full and frank disclosure: first, that there were appeals and judicial review proceedings pending in Indonesia against the Indonesian Bankruptcy Orders;¹² second, that the respondents were heavily contesting the Indonesian Bankruptcy Orders and that there were Indonesian judgments in favour of the respondents undermining the underlying debt and personal guarantees which resulted in the Indonesian Bankruptcy Orders; and third, that the respondents’ debts had in any event been satisfied by the seizure of assets in Indonesia.¹³

The decision

The issue that took the longest time to determine was whether there was a pending appeal to the Supreme Court of Indonesia. A number of affidavits were filed by both sides in relation to this point. In the end, I was of the view that there was probably no appeal actually underway. The grounds for common law recognition of the Indonesian Bankruptcy Orders were also met, and no defence was applicable. Recognition and assistance should be granted without any stay to accommodate such an appeal.

Analysis

In the present case, recognition of the Indonesian Bankruptcy Orders against the respondents was made on the basis of the common law, because the Model Law, as enacted in Singapore, does not extend to personal bankruptcy orders. In any event, the Indonesian Bankruptcy Orders predated the coming into force of the Model Law following the enactment of the Companies (Amendment) Act 2017 (No 15 of 2017), which amended the Companies Act (Cap 50, 2006 Rev Ed). The recognition of the Indonesian Bankruptcy Orders in relation to the connected company, PT Megalestari Unggul, was made under the common law as well.

Recognition at common law

Prior to the Model Law’s enactment and coming into force in Singapore, a number of cases recognised foreign corporate insolvency proceedings on the basis of common law. These included my own decisions in Re Opti-medix Ltd (in liquidation) and another matter [2016] 4 SLR 312, Re Taisoo Suk (as foreign representative of Hanjin Shipping Co Ltd) [2016] 5 SLR 787 and Re Gulf Pacific Shipping Ltd (in creditors’ voluntary liquidation) and others [2016] SGHC 287. These essentially proceeded on the basis of the endorsement of the modified universalist approach endorsed in the Court of Appeal’s decision in Beluga Chartering GmbH (in liquidation) and others v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (deugro (Singapore) Pte Ltd, non-party) [2014] 2 SLR 815 (“Beluga”).

The applicants referred to a number of cases in which foreign insolvency proceedings were considered in the context of the application of the res judicata doctrine: In Humpuss Sea Transport Pte Ltd (in compulsory liquidation) v PT Humpuss Intermoda Transportasi TBK and another [2016] 5 SLR 1322, the court refused to recognise an Indonesian court’s approval of a composition plan between a company and its creditors (referred to as a homologation judgment) on the basis that it was not final and conclusive (at [75]–[81]) and that the Indonesian court lacked jurisdiction (at [82]–[84]). In doing so, the court, citing Giant Light Metal Technology (Kunshan) Co Ltd v Aksa Far East Pte Ltd [2014] 2 SLR 545 (“Giant Light”) at [67], reiterated the criteria for recognition, namely that that the decision was the final and conclusive judgment of a court which, according to Singapore private international law rules, had jurisdiction, and no defence to recognition applied. The court there emphasised the need for finality and conclusiveness, without going into the question of the availability of any appeal, as it was primarily concerned with the operation of the res judicata doctrine. As to when a judgment would be final and conclusive, the Court of Appeal in The “Bunga Melati 5” [2012] 4 SLR 546 stated (at [81]):

… A judgment is final and conclusive on the merits if it is one which cannot be varied, re-opened or set aside by the court that delivered it ... [emphasis in original]

This was expanded on in the High Court’s decision in Manharlal Trikamdas Mody and another v Sumikin Bussan International (HK) Ltd [2014] 3 SLR 1161 which, citing The Vasiliy Golovnin [2007] 4 SLR(R) 277 and The Irini A (No 2) [1999] 1 Lloyd’s Rep 189, stated that a pending appeal does not mean that a judgment is not final and conclusive (at [141]).

Recognition and res judicata are doctrinally similar as some of their elements overlap. The clearest distinction, though, is in their effects: recognition provides a basis for various consequences, including, in the context of insolvency and bankruptcy proceedings, the rendering of assistance to the foreign insolvency practitioners appointed by the foreign court. In comparison, res judicata, which comprises three distinct but interrelated principles, namely, cause of action estoppel; issue estoppel; and the “extended” doctrine of res judicata as set out in Henderson v Henderson (1843) 3 Hare 100, is essentially a passive doctrine: see The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd (nTan Corporate Advisory Pte Ltd and others, other parties) and another appeal [2015] 5 SLR 1104 at [98]. Under the doctrine of res judicata, there is no scope for the granting of assistance or other similar consequential reliefs.

A similar position is stated in Dicey, Morris and Collins on the Conflict of Laws vol 1 (Lawrence Collins gen ed) (Sweet & Maxwell, 15th Ed, 2012) at para 14-026:

.... At common law, a foreign judgment may be final and conclusive even though an appeal is actually pending in the foreign country where it was given. “In order to its receiving effect here, a foreign decree need not be final in the sense that it cannot be made the subject of appeal to a higher court; but it must be final and...