Jeyaretnam Joshua Benjamin v Indra Krishnan

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 07 August 2001
• Neutral Citation: [2001] SGCA 52
• Docket Number: Civil Appeal No 600011 of
• Date: 07 August 2001
• Published date: 19 September 2003
• Year: 2001
• Plaintiff Counsel: Appellant in person
• Citation: [2001] SGCA 52
• Defendant Counsel: Davinder Singh SC and Hri Kumar (Drew & Napier)
• Court: Court of Appeal (Singapore)
• Subject Matter: Bankruptcy,Prior consent by debtor to bankruptcy order being made,Whether creditor right to proceed with bankruptcy petition,Whether burden on creditor to prove inability of debtor to pay debts,Bankruptcy order,Whether arrangement extortionate,Default by debtor under arrangement reflected in consent order,Insolvency Law

(delivering the grounds of judgment of the court): This was an appeal against a decision of the High Court upholding an order made by the assistant registrar on 19 January 2001 adjudging the appellant a bankrupt. We heard the appeal on 23 July 2001 and dismissed it. We now give our reasons.

The facts

The material facts giving rise to the bankruptcy order were largely undisputed. The respondent and nine other persons successfully sued the appellant (among others) for defamation and were awarded damages. The debts due to two of the judgment creditors, after some legal wrangling, were paid, leaving unpaid the debts due to the other eight creditors, including the respondent. The appellant failed to satisfy the debts due even after statutory demands had been served on him on 31 May 2000. Eventually, on 23 September 2000 the respondent and the other creditors filed bankruptcy petitions against the appellant, and the petitions were fixed to be heard on 3 November 2000. The amount owing by the appellant to the respondent at the date of the petition was $27,721.66.

Before the petitions were due to be heard, the appellant offered to pay the debts due to the eight creditors by instalments. On 3 November 2000 the respondent and the other creditors agreed to accede to the appellant`s request for payment by instalments subject to conditions. The agreement was reached through the appellant`s solicitor, Mr G Raman.

In accordance with this agreement, the parties appeared on that day before the assistant registrar to record what they had agreed in the form of a consent order. At the hearing, the appellant was represented by Mr G Raman. The parties had agreed that the appellant was to pay the respondent a sum of $2,500 on 6 November 2000 (and similar or identical sums to the other creditors) and the remainder by nine monthly instalments, commencing 1 December 2000, the last instalment to be paid on 1 August 2001, and if the appellant should fail to make payment of any instalments on time, the respondent was entitled to terminate the agreement. The parties further agreed as follows (as set out in [para ]2-4 of the consent order):

2. All payments are to be made by cash or cheque in the debtor`s name (such cheques being made payable to Drew & Napier). All such payments are to be made through the Debtor`s solicitors, G Raman & Partners and to the Creditor`s solicitors, and the letter accompanying such payments to be marked for the attention of Mr Davinder Singh or Mr Hri Kumar. If payment is made by cheque, the cheque must bear a date on or before the due date of payment. Otherwise, it will be treated as a failure to make payment on time.

3. The hearing of the Petition shall be adjourned for 1 week. In the event the Debtor pays the sum of $2,500.00 as provided in Clause 1(i) above, the Creditor`s solicitor shall inform the Court by 8 November 2000, whereupon the Petition will be withdrawn, with liberty to the Creditor to restore the same for hearing on or by 3 August 2001.

4. If the Debtor fails to make any of the payments set out in Clause 1 above, the Creditor shall be entitled, at his absolute discretion, to proceed with and/or restore this Bankruptcy Petition. In that event, the debtor shall consent to a bankruptcy order being made against him.

The appellant made the initial payment of $2,500 and paid the instalment due on 1 December 2000. However, on 28 December 2000, the appellant`s solicitors wrote to the respondent`s solicitors (and the other creditors` solicitors too) stating that he would not be able to make the instalment payment due on 1 January 2001 and asking for an extension until 16 January 2001 to make it. On 2 January 2001 the respondent`s solicitors replied acceding to the request, but stating very clearly that the extension was up to 12 noon on 16 January 2001 and that, if the appellant should fail to make the payment by the appointed time, the respondent reserved her right to proceed with bankruptcy. They further stated that their extension was granted without prejudice to the respondent`s rights under the terms of the consent order.

No payment was received by the respondent or her solicitors by noon on 16 January 2001. Thereupon by a letter of the same day, faxed at 12.01pm, the respondent`s solicitors wrote to the appellant`s solicitor terminating the agreement and stating that the respondent would proceed with the petition for a bankruptcy order. The respondent`s solicitors also wrote to the Registrar of the Supreme Court asking the latter to restore the petition (and the petitions of the other seven creditors) for hearing.

At 2.41pm the same day, the appellant`s solicitors faxed a letter to the respondent`s solicitors stating that the appellant would pay the overdue instalment the next morning. The respondent`s solicitor replied also on the same day, rejecting the appellant`s offer to pay, and stating that, in view of the breach, the respondent had terminated the agreement and was entitled to proceed with the bankruptcy proceedings.

The petition of the respondent (and also those of the other seven creditors) came up for hearing on 19 January 2001. The balance owing to all the petitioners as of that day was $175,313. After hearing counsel for the appellant and the respondent, the assistant registrar adjudged the appellant a bankrupt. In order to save costs, the other seven petitions were adjourned pending the present appeal.

The appellant`s appeal against the bankruptcy order was dismissed by the judge-in-chambers. The judge agreed with the assistant registrar that, upon the appellant`s failure to make the third payment on time, the respondent was entitled to terminate the agreement under which the respondent allowed the appellant to pay the debt by instalments and to demand that the appellant pay up all the outstanding debt. He noted that the main question which the court must decide in a bankruptcy petition hearing was to determine whether or not the debtor was able to pay his debt and, as he found like the assistant registrar, that the appellant was unable to pay up the debt, the assistant registrar was correct to have made the bankruptcy order. There was accordingly no basis for him to overturn the decision of the assistant registrar. We should add that, in coming to his decision to uphold the order made by the assistant registrar, the judge did not rely on the terms of the consent order that the appellant would consent to the making of a bankruptcy order against him.

The law

Under s 61(1) of the Bankruptcy Act (Cap 20, 2000 Ed), a creditor is permitted to present a bankruptcy petition against a debtor only if, inter alia, (i) the debt or aggregate amount of the debts is not less than $10,000; (ii) the debt is for a liquidated sum payable to the petitioning creditor immediately; and (iii) the debtor is unable to pay the debt. Under s 62, a debtor is presumed to be unable to pay the debt if, upon expiry of 21 days after having been served with a statutory demand, he still fails to comply with it. The court may, for sufficient reason, order the stay of a bankruptcy petition, either altogether or for a specified time and on such terms and conditions as it may think just (s 64) and it may make a bankruptcy order only if it is satisfied that the debt has neither been paid nor secured or compounded for (s 65(1)).

Finally, we ought to mention that under s 7, the court is empowered to review, rescind or vary any order made by it...