Ho Yu Tat Edward v Chen Kok Siang Joseph and another

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang JA
• Judgment Date: 22 April 2020
• Neutral Citation: [2020] SGCA 38
• Plaintiff Counsel: Fitzgerald Paul Michael (Paul Fitzgerald)
• Date: 22 April 2020
• Docket Number: Civil Appeal No 162 of 2019
• Hearing Date: 06 April 2020
• Subject Matter: Bankrupt's duties and liabilities,Insolvency Law,Bankruptcy,Striking out,Civil Procedure
• Published date: 25 April 2020
• Defendant Counsel: Christopher Anand s/o Daniel, Harjean Kaur and Keith Valentine Lee Jia Jin (Advocatus Law LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2020] SGCA 38
• Year: 2020

Tay Yong Kwang JA (delivering the grounds of decision of the court): Introduction

This was an appeal heard by way of video-conferencing facilities as a result of the prevailing regulations to combat the health situation caused by the covid-19 virus. All the parties were agreeable to proceeding in this manner. The appellant’s counsel had returned recently from abroad and was still subject to a 14-day Stay Home Notice on the date of hearing of this appeal. The appellant, who was in Malaysia and subject to the country’s Movement Control Order, applied to join in the video-conference and was allowed by this court to do so on the condition that he was to have no speaking rights.

The sole issue in this appeal concerned the following legal question: does a bankrupt in Malaysia have to obtain the sanction of the Director General of Insolvency (“the DGI”), who is the equivalent of Singapore’s Official Assignee (“the OA”), before he commences legal proceedings in Singapore which are based on claims that are vested in the DGI?

Section 38(1)(a) of the Insolvency Act 1967 (Act 360 w.e.f 31 December 1988) (M’sia) (“the Malaysian Insolvency Act”) stipulates that a bankrupt in Malaysia shall be incompetent to maintain any action without the “previous sanction” of the DGI, other than an action for damages in respect of an injury to his person. In this case, it is not disputed that the plaintiff/appellant obtained the DGI’s sanction only after he commenced the present action, Suit No 965 of 2018 (“Suit 965/2018”). Accordingly, in the striking out application taken out by the defendants/respondents before the Assistant Registrar (“the AR”), the main issue was whether the DGI’s sanction which was granted after the commencement of Suit 965/2018 cured the appellant’s failure to comply with s 38(1)(a) of the Malaysian Insolvency Act.

The AR held that the appellant’s failure to obtain the DGI’s prior sanction before commencement of the action could not be cured by the DGI’s sanction granted after commencement of the action. Accordingly, the AR struck out Suit 965/2018 on the ground that it was legally unsustainable as the appellant had no legal standing to commence Suit 965/2018 at the time of commencement. The appellant appealed to the High Court judge (“the Judge”). The Judge affirmed the AR’s decision in her oral judgment delivered on 29 July 2019.

Before us, the appellant advanced a new argument. His submission was that the DGI’s prior sanction was in fact not required before commencement of the action because the appellant’s claims had vested in the DGI. According to the appellant, the requirement of prior sanction applies only in respect of claims which do not vest in the DGI.¹ Therefore, both the AR and the Judge had asked the wrong question and considered the wrong issue, namely, whether the DGI’s sanction had retrospective effect.² This ought not to be the relevant question as it was not necessary for the appellant to seek the DGI’s prior sanction in the first place.

In the circumstances, the appellant submitted that the only irregularity in the present case was that he could not have commenced Suit 965/2018 in his own name but had to sue in the DGI’s name. He argued that this was a mere procedural irregularity and was curable by amending the name of the plaintiff under O 20 r 5(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”).³

At the conclusion of this appeal, we held that this new argument was untenable as it contradicted the plain wording of s 38(1)(a) of the Malaysian Insolvency Act. Further, we took the view that this argument resulted from an incorrect reading of this court’s decision in Standard Chartered Bank v Loh Chong Yong Thomas [2010] 2 SLR 569 (“Thomas Loh”). We therefore dismissed the appeal and indicated that we would explain our decision in greater detail subsequently. We now do so.

Facts

The appellant, Dr Edward Ho Yu Tat, is a Malaysian citizen. The first respondent, Mr Joseph Chen Kok Siang, was the former solicitor of the appellant. The first respondent is the managing partner of the second respondent, Joseph Chen & Co. He acted for the appellant who was the plaintiff in District Court Suit No 2230 of 2011 (“the Underlying Suit”) (which was originally started as a High Court action, Suit No 657 of 2010).⁴

We set out the agreed facts in chronological order.

The Underlying Suit

On 30 August 2010, the appellant commenced the Underlying Suit in the High Court against his former employer, the Nanyang Technological University (“NTU”).⁵ He claimed damages against NTU for defamation. The Underlying Suit was subsequently transferred from the High Court to the Subordinate Courts (now called the State Courts).

On 15 October 2012, the appellant engaged the second respondent to represent him in the Underlying Suit. The first respondent was the solicitor having conduct of the matter.⁶

On 5 December 2013, the appellant’s defamation claim was dismissed by the District Judge (“the DJ”). The DJ’s grounds of decision were released on 21 April 2014 (see Edward Ho Yu Tat v Nanyang Technology University, Singapore [2014] SGDC 135). The DJ held that the appellant had a “hopeless” case because of various deficiencies in his statement of claim (at [61]). In any event, notwithstanding these deficiencies, the DJ held that the appellant’s claim would have failed on its merits as well (at [62] and [84]).

On 26 September 2014, the appellant’s appeal against the DJ’s decision was dismissed by Choo Han Teck J in the High Court. By that time, the appellant was acting in person as he had terminated the respondents’ retainer on 11 December 2013.⁷

Suit 965/2018

On 10 December 2014, the appellant was made a bankrupt in Malaysia by a bankruptcy order of the Penang High Court.⁸ The appellant remained an undischarged bankrupt at the time this appeal was heard.

On 1 October 2018, the appellant commenced the present action against the respondents. The appellant sued the respondents for breach of contract and/or negligence arising out of their legal representation of the appellant in the Underlying Suit.

It was undisputed that the appellant did not seek the DGI’s sanction before commencing the present action. It was only on 15 October 2018 that the appellant applied to the DGI for his sanction.⁹

On 1 November 2018, the respondents entered an appearance in the present action although they had not been served with the court documents by the appellant.¹⁰

On 14 December 2018, the DGI, by way of a letter written in the Malay language which was translated into English, informed the appellant as follows:¹¹ 2 Please be informed that the Director General of Insolvency has approved the sanction for you to start and to continue with your action at the Singapore High Court and representing yourself in this suit action and possible appeals in the case. 3 Please take note of the following: (a) The Director General of Insolvency of Malaysia will not be responsible and should not be liable for any failure, loss and any costs involved or incurred by any party involved in the suit and/or arising out of the suit and failures, losses and any costs shall be borne by the guarantor of this sanction; (b) In case the court’s decision in the suit action is in favour of you, any money, compensation and interests received by you must be surrendered to the Director General of Insolvency Malaysia to be deposited into your bankruptcy estate for your creditors’ beneficial; …

The relevant legislative provisions

Section 152 of the Singapore Bankruptcy Act (Cap 20, 2009 Rev Ed) (“the Singapore Bankruptcy Act”) provides for the reciprocal recognition of the official assignees between Singapore and Malaysia. It states as follows:

Reciprocal recognition of Official Assignees

152.—(1) The Minister may, by notification in the Gazette, declare that the Government of Singapore has entered into an agreement with the government of Malaysia for the recognition by each government of the Official Assignees in bankruptcy appointed by the other government. (2) From the date of that notification where any person has been adjudged a bankrupt by a court in Malaysia, such property of the bankrupt situate in Singapore as would, if he had been adjudged bankrupt in Singapore, vest in the Official Assignee of Singapore, shall vest in the Official Assignee appointed by the government of Malaysia, and all courts in Singapore shall recognise the title of such Official Assignee to such property. (3) Subsection (2) shall not apply where a bankruptcy application has been made against the bankrupt in Singapore until the application has been dismissed or withdrawn or the bankruptcy order has been rescinded or annulled. (4) The production of an order of adjudication purporting to be certified, under the seal of the court in Malaysia making the order, by the registrar of that court, or of a copy of the official Gazette of Malaysia containing a notice of an order adjudging that person a bankrupt shall be conclusive proof in all courts in Singapore of the order having been duly made and of its date. (5) The Official Assignee of Malaysia may sue and be sued in any court in Singapore by the official name of “the Official Assignee of the Property of (name of bankrupt), a Bankrupt under the Law of Malaysia”.

In respect of s 152(2) of the Singapore Bankruptcy Act, the parties agreed that “property” would include claims in contract and in tort, such as the appellant’s present claims. This would be in line with this court’s decision in Thomas Loh at [14].

Section 38 of the Malaysian Insolvency Act sets out the various duties and disabilities that the appellant is subject to as an undischarged bankrupt in Malaysia:

Duties and disabilities of bankrupt

38. (1) Where a bankrupt has not obtained his discharge — (a) the bankrupt shall be...