Lim Lye Hiang v Official Assignee

• Jurisdiction: Singapore
• Judgment Date: 02 November 2011
• Date: 02 November 2011
• Docket Number: Civil Appeal No 195 of 2010
• Court: Court of Appeal (Singapore)

Lim Lye Hiang

Plaintiff

and

Official Assignee

Defendant

[2011] SGCA 56

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

VK Rajah JA

Civil Appeal No 195 of 2010

Court of Appeal

Insolvency Law—Bankruptcy—Discharge—Property which was part of bankrupt's estate only coming to trustee's attention after discharge of bankrupt—Whether discharge had effect of revesting property in discharged bankrupt—Sections 122, 124, 126, 127 and 128 Bankruptcy Act (Cap 20, 2009 Rev Ed)

Insolvency Law—Bankruptcy—Entitlement of beneficiary could not be immediately enforced without authorisation—Whether entitlement was a chose in action—Whether chose in action constituted property within Bankruptcy Act—Sections 2 (1) and 78 (1) (a)Bankruptcy Act (Cap 20, 2009 Rev Ed)

Insolvency Law—Bankruptcy—Whether s 78 (1) (b) Bankruptcy Act was satisfied—Whether both limbs of s 78 (1) Bankruptcy Act were disjunctive in nature—Sections 78 (1) (a) and 78 (1) (b) Bankruptcy Act (Cap 20, 2009 Rev Ed)

Provident Fund—Beneficiary—Nomination—Member nominating beneficiary to receive monies upon death—Whether beneficiary became entitled to receive monies upon death even though authorisation for payment had not yet been given—Sections 15 (5) and 20 (1) Central Provident Fund Act (Cap 36, 2001 Rev Ed)

A bankruptcy order was made against the appellant in January 1998. Separately, her sister, Lim Lye Keow (‘LLK’), had nominated the appellant pursuant to s 25 of the Central Provident Fund Act (Cap 36, 2001 Rev Ed) (‘CPFA’) to receive LLK's Central Provident Fund (‘CPF’) monies and Sing Tel discounted shares (collectively, ‘the Monies’). LLK passed away on 14 March 2008, at which point the appellant was still an undischarged bankrupt.

On 18 September 2008, the CPF Board (‘the Board’) sent a letter to the appellant informing her that although she had been nominated by LLK, the Monies would instead be released to the Official Assignee (‘OA’) because she was an undischarged bankrupt. Communications from the Board to the OA on this issue were not dealt with. The OA claimed it had no record of receiving them.

On 16 October 2009, the OA filed a report to the court in support of its application to discharge the appellant from bankruptcy. By this time, it had admitted proofs of debt and had published a notice that it intended to declare a first and final dividend. The last day for receipt of proofs of debt had already expired on 12 May 2008. On 13 November 2009, the court granted an order discharging the appellant from bankruptcy (‘the Discharge Order’) without any conditions attached.

On 12 January 2010, the appellant attempted to claim the Monies from the Board. The Board did not accede to her claim. Instead, it wrote to the OA again by e-mail. It requested the OA to give instructions for the transfer of the Monies to it if the appellant remained an undischarged bankrupt. The OA immediately instructed the Board to forward the Monies to it.

On 12 May 2010, the OA filed a summons seeking, inter alia, an order that the Monies be divisible among the appellant's creditors and payable to them as dividends on the basis that the Monies were property which had devolved on the appellant on 14 March 2008, notwithstanding that the Monies were received by the OAafter the appellant's discharge from bankruptcy. At first instance, the Assistant Registrar granted the order. The High Court Judge upheld the order.

The appellant appealed to the Court of Appeal. She raised two arguments: (a)that the provisions of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (‘BA’) meant that her entitlement to the Monies did not vest in the OA at the point of LLK's death; and (b)that even if the entitlement had vested in the OA at that time, her subsequent discharge had the effect of revesting that entitlement in her.

Held, dismissing the appeal:

(1) Section 20 (1) of the CPFA, which provided that CPF monies could be paid to a nominee only upon authorisation by the Board, was not relevant to the question of when the entitlement to the Monies had crystallised. Section 20 (1) was merely a procedural mechanism. Section 15 (5) clearly provided that the appellant became entitled to withdraw the Monies upon the death of LLK: at [22] and [23].

(2) The entitlement was a chose in action which constituted ‘property’ within s 2 (1) of the BA. The fact that there was no authorisation given by the Board pursuant to s 20 (1) of the CPFA was irrelevant because the existence of a chose in action does not depend upon immediate enforceability. What was crucial was that the entitlement came into existence upon LLK's death and that the appellant was still an undischarged bankrupt at that time. As this chose in action was acquired by or had devolved upon the appellant before her discharge from bankruptcy, it vested in the OA pursuant to s 78 (1) (a) of the BA: at [26] to [28], [31] and [33].

(3) The appellant's argument that s 78 (1) (b) of the BA was not satisfied was correct because there were no powers of appointment which were in issue. However, both limbs of s 78 (1) were to be read disjunctively. The entitlement formed part of her estate in bankruptcy pursuant to s 78 (1) (a). That alone was sufficient for the entitlement to vest in the OA: at [38].

(4) Section 127 (1) of the BA provided that a discharge released the bankrupt from all debts provable in his bankruptcy, except for debts specified in s 127 itself and debts which were specified by the court under s 124 or 126. The absence of debts specified by the court in the Discharge Order meant that (if no debts specified in s 127 were in issue) the appellant was released from all debts provable in her bankruptcy. Such absence was not relevant to the question of whether the discharge had the additional effect of revesting property, over and above releasing her from all debts provable in her bankruptcy: at [43] and [45].

(5) A discharge in itself did not have the effect of revesting property in the discharged bankrupt. First, the provisions of the BA plainly contemplated that the administration of the bankrupt's estate might still continue after discharge. Section 128 (1) provided that a discharged bankrupt would provide assistance in the realisation and distribution of such of his property as is vested in the OA: at [46].

(6) Even though s 76 (1) (a) provided that property automatically vested in the OA at the onset of bankruptcy, s 127 (1) was significantly silent as to any revesting upon discharge, which marked the end of bankruptcy. By contrast, the provisions on annulment expressly provide that an annulment had the effect of revesting property. It was very unlikely that the same effect would be achieved by means of a discharge given that s 127 was silent on this point: at [47].

(7) Section 122 contemplated that the bankrupt would obtain property from his estate only if his creditors had been paid in full. Any revesting of property upon discharge would in effect circumvent s 122: at [49].

(8) Secondly, the objectives of the discharge regime supported the proposition that a discharge did not automatically revest property. Although the OA might not have completed the realisation and distribution of the estate, he might yet be of the opinion that a bankrupt was nonetheless deserving of discharge. Should a discharge have the effect of automatically revesting property, this consideration would militate against a decision to grant a discharge. This would not be an interpretation of the BA which accorded with its purpose of facilitating discharges where appropriate: at [50].

(9) Thirdly, the English and Australian courts had held that a discharge did not in itself revest property. These decisions were highly persuasive in so far as the relevant provisions were in pari materia with those in the BA: at [51].

(10) A bankrupt's discharge released him personally from the debts and did not affect the debts themselves. Those creditors whose debts were provable in the bankruptcy and from which the bankrupt was released due to s 127 were left to prove in the bankruptcy against the bankrupt's estate, which remained vested in the OA for this purpose: at [56].

[Observation: There should be finality in terms of the identity of the creditors who were entitled to a portion of the bankrupt's estate. If there was property which came to light after the final dividend had been declared, creditors who had not proved were not entitled to claim a share of that property in satisfaction of past dividends which they failed to receive, or to claim future dividends which were declared from the realisation of that property: at [61]

Where the discharge was granted after the final dividend fell short of satisfying the creditors in full, a revesting of property would disrupt the allocation of rights in s 122. However, where the discharge was granted after all the creditors had been paid in full, the requirements of s 122 had been met. Any property would be held by the OA on trust for the discharged bankrupt beneficially. This was because the purpose for which the property was held by the OA had been achieved: at [64] and [65].

If a discharged bankrupt desired that property should revest in him, it would be prudent for him first to contact the OA. If the OA agreed, then it was for the OA to carry out the necessary steps for the transfer of title to the discharged bankrupt. If the OA disagreed, or imposed conditions with which the discharged bankrupt disagreed, then he should apply to the court for review of the OA's decision. If the OA agreed with the representations, then the cost and time of the application and hearing would be saved: at [66] and [67].

The letter from the Board to the appellant stated that the Monies would be released to the OA because she was an undischarged bankrupt. There were no subsequent representations made to the contrary by the OA or the CPF Board. The appellant was not misled in any way. She did not rely to...