Mah Wand Hew v Ong Yew Huat & Another

• Judge: Lai Kew Chai J
• Judgment Date: 25 November 2002
• Neutral Citation: [2002] SGHC 281
• Citation: [2002] SGHC 281
• Defendant Counsel: Siraj Omar (Drew and Napier)
• Published date: 19 September 2003
• Plaintiff Counsel: Siva Murugaiyan and Parveen Kaur Nagpal (Sant Singh Partnership)
• Date: 25 November 2002
• Docket Number: Originating Summons No 1495 of
• Court: High Court (Singapore)
• Subject Matter: Insolvency Law,Pay,Notice of rejection of proof of debt,Whether plaintiff employee of company,Whether court should exercise discretion to extend time,Employment Law,Liquidator,Proceedings to reverse rejection of proof of debt,Winding up,Recovery,Whether liquidators wrongly rejected proof of debt,Plaintiff commencing proceedings after expiry of statutory period,rr 93,190 Companies (Winding Up) Rules (Cap 50, R1, 1990 Rev Ed)

Judgment Cur Adv Vult

GROUNDS OF DECISION

Introduction

1 On 7 December 1998 the plaintiff filed her Proof of Debt in which she claimed US$142,218.00. It is made up of overdue salary, unused annual leave, 13^th month salary for 1997, three months’ salary in lieu of notice and, by far the largest claim, for retrenchment benefits for 30 years amounting to US$99,000.00. The defendants as the Liquidators of Hotel Equatorial (S) Pte Limited rejected the Proof of Debts on 3 April 2000. On 26 September 2000 the plaintiff filed this Originating Summons and applied to reverse the rejection of the Proof of Debt, some 5 months after the statutory period of 21 days, which expired on 24 April, 2000.

2 The threshold question is whether this court should exercise its power to extend time under Rule 93 of the Companies (Winding Up) Rules which provides as follows: "If a creditor…is dissatisfied with the decision of the liquidator in respect of a proof of debt, the Court may, on the application of the creditor…reverse or vary the decision but subject to the power of the Court to extend time, no application to reverse or vary the decision of the liquidator in a winding up by the Court in rejecting a proof sent to him by a creditor…shall be entertained, unless notice of the application is given before the expiration of 21 days from the date of the service of the notice of rejection."

3 If time is extended, the determinative question is whether the plaintiff was at all material times in the employ of the defendants or of its venture in Guangzhou, Peoples’ Republic of China ("PRC"). If that question is resolved and the defendants were the employer of the plaintiff, this court can then go further and determine if the defendants are liable to pay each of the constituent claim of the plaintiffs as an employee following the retrenchment of the staff of the defendants.

The background

4 The plaintiff has worked initially for the defendants and later (to use a neutral expression) in other establishments with which the defendants have had some business dealings for some 29 years from 10 August 1969 to 13 August, 1998. On or about 4 December 1998 the defendants were placed under creditors’ voluntary liquidation and the defendants were appointed as liquidators of the company.

5 The plaintiff began her career with the defendant company as a waitress but was soon promoted to work in the company’s finance department. In January 1989, the plaintiff accepted an offer by the company to work as a Accounts Assistant. The plaintiff accepted and following her acceptance she proceeded to work at the Guangzhou Hotel Equatorial, which the defendant company operated. I shall elaborate on the terms of the management contract. Whether she remained as an employee of the defendant company or whether she had become an employee of Guangzhou Hotel Equatorial is a central question to which I shall have to return.

6 It is common ground that the land and premises in which Guangzhou Hotel Equatorial operated were owned by a Chinese entity known as the Guangzhou International Investment Mansion ("the Owners"). The defendant company, having established some reputation in the hotel industry, was appointed as managers under and pursuant to a management contract dated 15 May 1988 ("the Management Contract"). In my view, the key to determine the identity of the employers of the plaintiff lies in a precise understanding of the nature, scope and the respective duties and obligations of the Owners and the defendant company. Another significant key is to identify and understand the legal status of Guangzhou Hotel Equatorial under the laws of the PRC.

7 However, disputes arose between the defendant company and the Owners sometime in 1992/3. In 1994 the Owners commenced arbitration proceedings. In early 1998 an adverse final award was given against the defendant company. It is not relevant for present purposes to know in any detail the nature of the disputes. Suffice it to say that on or about 5 March 1998, the Owners entered upon the premises of the hotel and took possession of it. In the wake of this self-help operation, the hotel business ceased and most of the employees working in the hotel were forced to leave.

8 At the request of the defendant company, and it was not seriously disputed, the plaintiff remained on the premises to settle the outstanding financial maters between the defendant company and the Owners. She looked after and acted in the best interest of the defendant company at, I would add on the evidence, some peril to her own personal safety. She feared for her safety but she stayed behind on the promise of the managing director of the defendant company that representatives from the defendant company from Singapore would be sent to assist her. Help never came. After two weeks of living in fear and trepidation, the plaintiff escaped from the Owners on 24 March 1998, carrying with her only her handbag, passport and clothes on her back. She made her way from Guangzhou to Hong Kong, and thence to Kuala Lumpur and Singapore.

9 After her return to Singapore, the plaintiff attended the defendant company’s managing director on at least 10 occasions. She gave information regarding the takeover, including the handing over of the accounts. She repeatedly asked for her salaries. Finally she was paid her October and November 1998 salaries of US$3,300 per month. According to her, the managing director promised that she would be paid her outstanding salary shortly.

10 Instead of paying her the arrears of salary, the defendant comp[any on 13 August 1998 wrongfully terminated the plaintiff’s employment with effect, retrospectively, from 31 March 1998. In September, 1998 the plaintiff engaged solicitors to recover her outstanding salary and other benefits due to her from the defendant company. Owing to the liquidation of the defendant company, legal proceedings were discontinued and a Proof of Debt was lodged.

11 The claims amounted to US$142,218.00 and the particulars of the claims are as follows:

PARTICULARS
Overdue salary from December 1997 To July 1998 at US$3,300 per month US$26,400.00
Overdue salary from 1 August 1998 To 13 August 1998 (pro-rated)	US$ 1,383.00
Unused annual leave for 1997 (21 days)	US$ 2,235.00
13th months salary for 1997	US$ 3,300.00
3 months’ salary in lieu for 1997	US$ 9,900.00
Retrenchment benefits for 30 years of service At US$3,300.00 per year	US$99,000,00
Total	US$142,218.00

12 About 1 year after lodging her Proof of Debt, the Liquidators of the defendant company issued their Notice of Rejection of Proof of Debt. They alleged that the documents they had did not support the claims.

13 The plaintiff, not unexpectedly, encountered serious financial difficulties, not having received any income for some time and not been able to find employment until August 1999. She had to resort to loans from friends and relatives. When she was financially able and after obtaining more documentation in this case, she instructed solicitors to pursue her claims. Financially, she commenced these proceedings on 26 September 2000.

Extension of time

14 The power of the Court to extend time is set out in Rule 190 of the Companies (Winding Up) Rules which provides:

"The Court may, in any case which it fit, extend or abridge the time appointed by these Rules or fixed by any order of the Court for doing any act or taking any proceeding."

15 On the evidence, I am satisfied that she did not commence these proceedings because she was financially unable to do so. She did not have money to pay her solicitors. I accept the evidence of Mah Seng Peng and Tan Lye Choo regarding her financial embarrassment. Her adverse financial position was due to the fact she had not been paid her remuneration and other benefits. The period of her financial embarrassment was lengthened when the Liquidators’ adjudication of the Proof of Claim took almost 16 months. The defendants have not shown that they would be unjustly prejudiced by the extension of time. The liquidators were all too aware of the objections and they had not carried out any distributions of dividends to such an extent that they would not be able to meet the payment of these claims, if found liable, since these claims enjoy a very high priority in the liquidation of the assets of the...