Jeyaretnam Joshua Benjamin v Indra Krishnan

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 25 November 2004
• Neutral Citation: [2004] SGCA 55
• Citation: [2004] SGCA 55
• Defendant Counsel: Sarjit Singh (Official Assignee), Chan Wang Ho and Moey Weng Foo (Insolvency and Public Trustee's Office),Davinder Singh SC and Hri Kumar (Drew and Napier LLC),Ashok Kumar and Foo Hsiang Ming (Allen and Gledhill)
• Published date: 29 November 2004
• Plaintiff Counsel: Appellant in person
• Date: 25 November 2004
• Docket Number: Civil Appeal No 40 of 2004
• Court: Court of Appeal (Singapore)
• Subject Matter: Section 129 Bankruptcy Act (Cap 20, 2000 Rev Ed),Whether court should exercise discretion to grant discharge,Bankruptcy,Bankrupt's duty to disclose all assets,Insolvency Law,Bankruptcy effects,Creditors and Official Assignee opposing bankrupt's application for discharge from bankruptcy,Administration of bankrupt's estate incomplete,Bankrupt's duty to co-operate with Official Assignee,Bankrupt’s duties and liabilities,Bankrupt's dishonesty and lack of co-operation with Official Assignee considered,Whether court should grant bankrupt conditional discharge,Section 124 Bankruptcy Act (Cap 20, 2000 Rev Ed)

25 November 2004 Judgment reserved.

Chao Hick Tin JA (delivering the judgment of the court):

1 This is an appeal against the decision of the High Court in Re Jeyaretnam Joshua Benjamin, ex parte Indra Krishnan (No 2) [2004] 3 SLR 133 refusing the appellant’s application for his discharge from bankruptcy. The matter first came before the assistant registrar who denied his request and it went on appeal to a judge in chambers. Having failed before Choo Han Teck J, the application is now before this court. We heard the parties on 26 October 2004 and this is our reserved judgment.

The background

2 The appellant was adjudicated a bankrupt on 19 January 2001. Before the bankruptcy order was made, he was allowed by his petitioning creditors to pay his debts by instalments. As he had failed to keep up with his promise to pay by instalments, the creditors proceeded with the bankruptcy petition.

3 Fifteen creditors have filed proofs of debts against the appellant which in total came up to $618,205.51. Most of these debts arose from damages awarded against him in three libel suits brought by the creditors.

4 In January 2004, about three years after the making of the bankruptcy order, the appellant informed the Official Assignee (“OA”) that he proposed to apply to court for a discharge from bankruptcy as he intended to make a composition offer of 20% of his proved debts to his creditors. The OA informed the appellant that in view of certain ongoing suits in which the appellant was involved in Singapore, as well as an action in Malaysia relating to a property in Johor which was in the name of his late sister, and as his assets had not been fully realised, the OA could not support his application for a discharge. Notwithstanding this negative intimation, the appellant proceeded to file an application for his discharge.

5 Having failed before the assistant registrar, the appellant raised his composition to 25% when the matter came before the High Court. At the hearing, the appellant also made the assertion that the creditors were not really serious in wanting to recover the debts owed to them and that their real reason for opposing his discharge was political, which was to prevent him from taking part in Parliamentary elections. A bankrupt is not qualified to run for election. Choo J refused the appellant a discharge on the following grounds:

(a) The administration of the appellant’s estate had not yet been completed;

(b) In view of the appellant’s claim to his late sister’s property in Johor, it would not be fair to the creditors if the bankruptcy order was to be so discharged;

(c) In the circumstances and bearing in mind that only three years had elapsed since the making of the bankruptcy order, to discharge the order at this time would be premature.

Issues on appeal

6 Before us, the bulk of the arguments by the appellant, who appeared in person, centred on his contention that the eight creditors who petitioned for his bankruptcy, as well as other creditors, were resisting his present application for a discharge on political grounds and that they had an agenda which was outside the scope of these proceedings. Having regard to the offer which he had made, the appellant argued that the court should, in the exercise of its discretion, grant the discharge as under his offer, each creditor would be paid a reasonable proportion of the debt owed by the appellant to that creditor. There would be no advantage to the creditors in making the appellant wait any more for his discharge. Moreover, he was now prepared to enhance his offer from a quarter to one-third of the proved debts. He told this court that funds to meet this offer would come from relatives and friends who would be helping him to gain his discharge.

Statutory regime for discharge

7 It is clear to us that the main reason why Choo J refused the application was because the administration of the bankrupt’s estate had not yet been completed. This was also the basis upon which the OA was unable to support the application for a discharge, besides the fact that the appellant has been most uncooperative. The appellant has not challenged the fact that the administration of his affairs is not yet completed. What the appellant seems to be suggesting is that, notwithstanding the state of the administration, as he has made a reasonable offer to pay a part of the proved debts, that per se should be a sufficient ground to grant him a discharge. Moreover, the creditors have a political agenda in opposing his application.

8 The statutory provisions which govern the discharge of a bankrupt are contained in s 124 of the Bankruptcy Act (Cap 20, 2000 Rev Ed) (“the Act”). Subsection (1) provides that an application for a discharge may be made “at any time”. Subsection (2) provides that before making an order of discharge, the court should hear the OA and the creditors. Subsection (3) reads:

Subject to subsection (4) on an application under this section, the court may —

(a) refuse to discharge the bankrupt from bankruptcy;

(b) make an order discharging him absolutely; or

(c) make an order discharging him subject to such conditions as it thinks fit to impose, including conditions with respect to —

(i) any income which may be subsequently

due to him; or

(ii) any property devolving upon him, or acquired by him, after his discharge,

as may be specified in the order.

Subsection (4) reads:

Where the bankrupt has committed an offence under this Act … or upon proof of any of the facts mentioned in subsection (5), the court shall —

(a) refuse to discharge the bankrupt from bankruptcy;

(b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25% or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him, or acquired by him, after his discharge, as may be specified in the order and to such other conditions as the court may think fit to impose; or

(c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit, make an order discharging the bankrupt subject to such conditions as the court may think fit to impose.

9 It is clear that under the regime as set out in s 124, it is entirely a matter for the court, in the exercise of its discretion, no doubt to be exercised judicially, and taking into account all the circumstances of the case, whether to make an order of discharge. While subsection (3) is subject to subsection (4), it is clear that the court may still refuse a discharge where subsection (4) does not apply. Where the factors mentioned in subsections (4) and (5) come into play, the court is prevented from granting an absolute discharge.

10 A local case which dealt extensively with the question of the exercise of such a discretion is Re Siah Ooi Choe [1998] 1 SLR 903. In that case, Siah, an entrepreneur and a self-made man of a large group of companies, fell into difficult times during the economic crisis which confronted Singapore in 1985–1986. The banks and financial institutions came down on him as he had given personal guarantees for the loans offered to his companies. His empire collapsed and he was made a bankrupt in September 1986, with proofs of debts amounting to some $125m. From January 1992, he began working as a business consultant earning $3,200 a month and made contributions to his bankrupt estate account. More than ten years later, he applied to have his bankruptcy discharged. Nine of the creditors, representing about half of the total indebtedness, objected to his application. The High Court upheld the assistant registrar’s decision to grant Siah a discharge from bankruptcy. Warren L H Khoo J, in reviewing the objects of the statutory provisions, identified two major conflicting concerns that were embodied in s 124. On the one hand, businessmen who became insolvent through being caught at the wrong turning of the economic cycle should be given a second chance in life. On the other hand, the provisions should not be allowed to be used by dishonest individuals who would get an undeserved advantage, to the detriment of their creditors, from their own wrongdoings. In exercising his discretion in favour of the applicant there, the judge had regard to the following:

(a) Siah had been in bankruptcy for more than ten years;

(b) he had co-operated fully with the OA;

(c) he had conducted himself in an exemplary manner and had paid a respectable amount every month from his small income to the estate account; and

(d) he had agreed to sell off his only asset, an Housng and Development Board flat, and pay the net proceeds to the OA.

11 Khoo J also noted at [17] that “except in very exceptional circumstances, the minimum waiting time for s 124 cases should be at least similar to that for s 125 cases” and that it should probably be longer. A s 125 discharge, which is by a certificate of the OA, involves an estate where the total debts proved do not exceed $500,000 and a period of three years has elapsed since the making of the bankruptcy order.

Political purpose

12 Before we move on to consider the substantive points raised by the OA to oppose the appellant’s discharge at this stage, we would like to briefly address the contention of the appellant that the creditors opposed his discharge because they have a political agenda, a purpose which would amount to an abuse of the court’s process. We would reiterate that in considering the question as to whether a bankruptcy order should be discharged, the court should be guided by the letter and the spirit of the law. Indeed, that was precisely the way the judge below dealt with this point at [4]:

The appellant charged that the creditors’ only reason for objecting to his application was a political one, namely to prevent his return to Parliament. In reply, Mr Davinder Singh disagreed and contended that it was the dishonesty of the appellant that required his application to be...