Liew Kai Lung Karl v Ching Chiat Kwong

JudgeEdmund Leow JC
Judgment Date16 May 2016
Neutral Citation[2016] SGHC 98
Citation[2016] SGHC 98
CourtHigh Court (Singapore)
Published date20 May 2016
Docket NumberOriginating Summons (Bankruptcy) No 89 of 2015 (Registrar’s Appeal No 11 of 2016)
Plaintiff CounselBalasubramaniam Albert Selvaraja (Mohan Das Naidu & Partners)
Defendant CounselSim Kwan Kiat and Tan Zhi Han Eugene (Rajah & Tann Singapore LLP)
Subject MatterInsolvency Law,Bankruptcy,Bankruptcy application disputed by debtor,Abuse of Process
Hearing Date15 February 2016
Edmund Leow JC: Introduction

Liew Kai Lung, Karl (“the appellant”) applied in Originating Summons (Bankruptcy) No 89 of 2015 (“OSB 89/2015”) to dismiss the application by Ching Chiat Kwong (“the respondent”) for a Bankruptcy Order in Case No B 2552/2014 against the Plaintiff filed on 19 December 2014 (“the Application”), or in the alternative, to stay all proceedings on the Application for such time as it is necessary to determine by trial whether the appellant is indebted to the respondent. The appellant’s application was dismissed by the Assistant Registrar (“the AR”) and he filed this Registrar’s Appeal No 11 of 2016 against the AR’s decision.

At the conclusion of the hearing before me, I affirmed the decision below with costs. The appellant has filed a notice of appeal (in Civil Appeal No 21 of 2016) against my decision. I thus set out my reasons.

Factual and procedural background

The appellant was the director of Realm Capital Limited (“Realm Capital”), and the respondent was the director of Ever Tycoon Limited (“Ever Tycoon”).1 After Realm Capital failed to make payment to Ever Tycoon under certain facility agreements2 and the appellant failed to make payment to Ever Tycoon under certain personal guarantees,3 the appellant and respondent entered into the following: a deed of settlement dated 4 September 2012 (the Deed of Settlement”);4 a supplementary deed of settlement dated 4 March 2013;5 a second supplementary deed of settlement dated 3 May 2013;6 and a third supplementary deed of settlement dated 16 December 2013.7

Under the Deed of Settlement, the respondent and Ever Tycoon agreed to refrain from commencing legal proceedings against, inter alia, the appellant till 1 March 2013 in respect of an unpaid loan of $4m. The appellant was to repay $1.5m by 4 September 2012 and a further sum of $500,000 by 9 September 2012 (“the Settlement Payments”) in exchange. It was undisputed that the appellant had made the Settlement Payments. Clause 1.1(ii) of the Deed of Settlement also provided that the aggregate liabilities and obligations of, inter alia, the appellant towards the respondent and Ever Tycoon after the Settlement Payments would not exceed $2m; this was referred to in the Deed of Settlement as the “Balance Principal”. Under cl 1.3 of the same deed, parties agreed to reach an agreement regarding the reinvestment or settlement of the Balance Principal by no later than 1 March 2013. The three supplementary deeds (“the Supplementary Deeds”) served to extend the deadline and forbearance period up till 1 May 2014. Under cl 2.4 of the third supplementary deed, it was also provided that if the parties failed to reach agreement under cl 1.3, the appellant and Realm Capital would be jointly and/or severally liable to pay to the respondent and Ever Tycoon the Balance Principal in addition to all accrued interest at the rate of 5% per annum from 9 September 2012 until the date of full payment.

Parties failed to reach an agreement under cl 1.3; the respondent then served a statutory demand on the plaintiff dated 14 October 2014 for a sum of $2,209,863.01 (“the SD”) pursuant to cl 2.4 of the third supplementary deed.8 The plaintiff had attempted, unsuccessfully, to set aside the SD in Originating Summons (Bankruptcy) No 15 of 2015 (“OSB 15/2015”) and in the consequent Registrar’s Appeal No 89 of 2015 (“RA 89/2015”) (See Liew Kai Lung Karl v Ching Chiat Kwong [2015] 3 SLR 1204). The main grounds relied on by the appellant in RA 89/2015 were that the service of the SD was irregular and that there was a dispute as to the debt owed, giving rise to a genuine triable issue. The appellant attempted to argue that the respondent was double claiming for the Settlement Payments, which was a genuine triable issue; Chan Seng Onn J found the argument completely unmeritorious since it was quite apparent that the SD was for the Balance Principal and thus a separate sum and dismissed the appeal. The Court of Appeal in Civil Appeal No 77 of 2015 (“CA 77/2015”) agreed with Chan J and dismissed the appeal.9 The appellant failed to comply with the SD, so the respondent applied for a Bankruptcy Order in the Application. The appellant brought OSB 89/2015 for a dismissal or, in the alternative, a stay of the Application.

The appellant’s main arguments in OSB 89/2015 before the AR were first, the facility agreements forming the foundation for the SD were never utilized and so there were no disbursement of funds by Ever Tycoon to Realm Capital, and second, the appellant was acting under a mistake of fact that he had executed the personal guarantees in favour of Ever Tycoon which formed the foundation for the SD, when he had never done so.10 Curiously, the appellant appeared to contradict himself in his submissions by also claiming that he was labouring under incessant moral pressure exerted by the respondent when he executed those personal guarantees.11 The appellant claimed that the personal guarantees that formed the basis of the dispute were “contrived”.12 He also claimed that he was misled by his former solicitors, who were discharged in May 2015, into believing that he had executed those personal guarantees. The appellant also alleged that the respondent was fully aware of the lack of disbursement under the facility agreements and the non-execution of the personal guarantees.13 The appellant implied that the Deed of Settlement and the Supplementary Deeds were invented,14 or should be void by virtue of the respondent’s knowledge.15

The appellant’s counsel argued that the appellant did not know and did not understand the issues as he was unrepresented when he filed the Appellant’s Case for CA 77/2015 in July 2015. Even when appellant’s counsel came on-board in late September 2015, it was too late to raise those arguments, and so benefit of the doubt should be given to the appellant.16

When the AR pointed out that CA 77/2015 was heard in November 2015, and so it was open to the appellant’s counsel to file an application for leave to adduce further evidence, the appellant’s counsel merely responded that he was too busy and did not have time to do so.17

The AR was of the view that the issue of whether the deed was signed under mistake was a substantive one that impinged on the validity of the SD; thus it should have been dealt with in Originating Summons (Bankruptcy) No 15 of 2015. Given that the Court of Appeal had already affirmed the validity of the SD in CA 77/2015, there was no basis to dismiss the Application which was premised on a valid statutory demand; thus she dismissed Prayer 1 of OSB 89/2015.18 The AR found that the documents and facts that formed the basis for the appellant’s arguments in OSB 89/2015 were already in the appellant’s possession by May 2015 and were in fact canvassed in the Appellant’s Case for CA 77/2015, though those arguments were not raised at the appeal.19 She was of the view that there was no cogent explanation as to why the arguments that were being raised before her could not have been canvassed before the Court of Appeal in CA 77/2015 by way of an application to adduce new evidence.20 She thus decided that there was no basis to exercise the discretion to stay the Application and dismissed Prayer 2 of OSB 89/2015.

Parties’ Arguments

The appellant essentially repeated the same arguments that were put before the AR at para 6 above, and also pointed out that there were at least three major triable...

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