Official Receiver of Hongkong v Kao Wei Tseng and Others

• Jurisdiction: Singapore
• Judge: Lai Kew Chai J
• Judgment Date: 29 March 1990
• Neutral Citation: [1990] SGCA 3
• Date: 29 March 1990
• Subject Matter: Winding up,Company wound up in country of origin,Power of foreign liquidator,Liquidator,Insolvency Law,Liquidator appointed in country of origin,Power of court to summon persons connected with company,ss 285, 286, 350, 351, 377 (1) & (2) Companies Act (Cap 50)
• Docket Number: Civil Appeal No 8 of 1988
• Published date: 19 September 2003
• Defendant Counsel: TT Rajah and VK Rajah (Rajah & Tann),Ruth Kao (Ruth Kao)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: John Lindsay QC and Tang Khin Wai (Lee & Lee)

Cur Adv Vult

This is an appeal against the decision of the High Court which ruled that it had no jurisdiction under s 285 of the Companies Act (Cap 50) (the Act) to summon before it for examination under oath persons allegedly connected with the affairs or property of a company which was incorporated in Hong Kong, which was registered in Singapore as a foreign company, but which was not wound up by the High Court in Singapore.

The appellant, the Official Receiver of Hong Kong acting as liquidator of China Underwriters Life and General Insurance Co Ltd (in liquidation) (hereinafter referred to as China Underwriters), by an originating summons filed in the High Court on 7 January 1987, applied for orders to summon before it the three respondents (and the responsible officers in the case of the third respondents) and for them to be examined on oath concerning the affairs and property of China Underwriters. The application was successfully opposed by the first and third respondents on the ground that the court had no jurisdiction; the second respondent, not being traceable, did not play any part in these proceedings.

China Underwriters was incorporated in Hong Kong on 21 January 1924. On 15 December 1980 it was registered in Singapore as a foreign company under the Companies Act (Cap 185, 1970 Ed). The Supreme Court of Hong Kong on 7 May 1984 made a winding-up order against China Underwriters. The Official Receiver, Hong Kong, was appointed to be liquidator of China Underwriters. Notice of the liquidation of the appellant was given to the Registrar of Companies of Singapore on 27 July 1984. At all material times it has not been the subject of a winding-up order of the High Court of Singapore and no liquidator for China Underwriters in Singapore has been appointed. When the matter came up before the High Court, China Underwriters had been removed from the register of foreign companies.

In 1981 the shares in China Underwriters were acquired by Carrian Investments Ltd (CIL) which was incorporated in Hong Kong and which was also in liquidation when this matter came up before the High Court. CIL was part of the Carrian group, which was controlled by one George Tan, and which (according to the affidavit of Mr JT Allen, a deputy principal solicitor of the Official Receiver`s Office of Hong Kong) `collapsed in circumstances of public scandal in 1982 and whose affairs have since attracted considerable notoriety in Hong Kong, Malaysia and elsewhere`. New directors from within the Carrian group were appointed to the board of directors of China Underwriters after it became a subsidiary of CIL and they included, among others, the second respondent and Kenneth Kao. The second respondent was the brother of George Tan and was a director of many companies within the Carrian group. Kenneth Kao was the son of the first respondent who was a deputy general manager of the third respondents until 31 May 1982 when he retired from the bank. The first respondent was also the father-in-law of George Tan who was at all material times the controller of the Carrian group.

The investigations of the appellant revealed that in August 1980, China Underwriters acquired ownership of the 12th floor of International Plaza, Singapore, which in January 1982 was free from all encumbrances and was valued at $15.6m. It was also found that in July 1982 China Underwriters obtained two loans from the third respondents, a bank in Singapore, which totalled $25m. As security, China Underwriters mortgaged its 12th floor, International Plaza for $9m and pledged its time deposit of $16m. It was further found that the proceeds of the loans from the third respondents were not used for the benefit of China Underwriters but were used for the benefit of other companies within the Carrian group and that such proceeds and the securities furnished by China Underwriters had become forever lost to China Underwriters.

Not unexpectedly, the appellant sought information from the third respondents as to the identities of the persons who negotiated the loans for both sides and the knowledge of the responsible officers of the third respondents as to the purposes for which China Underwriters had taken the loans. In his affidavit Mr Chan Chwee Chiew, a deputy general manager of the third respondents, affirmed that the first respondent was appointed a deputy general manager of the third respondents in May 1980 and remained in that capacity until 31 May 1982 when he retired. Apart from introducing China Underwriters as a new customer of the third respondents, it was asserted that the first respondent `was not a party to the bank`s decision to grant the banking facilities of $25m nor was he in a position to negotiate and/or approve the said loans on the bank`s behalf`. It was also disclosed by the third respondents that the deputy general manager who had negotiated the loans had returned to The Peoples` Republic of China and that he was directly accountable to the then general manager of the third respondents, Mr Hsueh Wen Lin, who was also a citizen of China and whose term of office in Singapore ended in April 1983. The third respondents had produced documentary evidence that the two loans were drawn down by China Underwriters on 15 June 1982 as to $16m and on 18 June 1982 as to $9m through its current account and that on 29 July 1982 the overdraft in the relevant account had been reduced to zero. The appellant did not produce any further evidence as to what happened after 29 July 1982 which would explain the loss of the $25m and the securities.

In support of the appellant`s application, Mr JT Allen in his affidavit mentioned that `it (was) possible that the disposition of (China Underwriters`) assets as security for loans, not for use by (China Underwriters) but for use by other Carrian group companies (might) have been a breach of duties of the ... directors who were concerned` and that `constructive trusteeship obligations (might) arise on the part of other persons or institutions connected with those transactions in so far as they (might) have been aware of apparent breach of duties by the ... directors`. He further mentioned that the appellant was advised by leading counsel that the duty of the appellant, as liquidator of China Underwriters, was to enquire fully into these matters and, in order to ascertain the factual position, to examine persons connected with the transactions under s 285 of the Act.

We should now set out the relevant provisions of the Act. Section 285 reads:

(1) The Court may summon before it any officer of the company or person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or any person whom the Court considers capable of giving information concerning the promotion, formation, trade dealings, affairs or property of the company.

(2) The Court may examine him on oath concerning the matters mentioned in subsection (1) either by word of mouth or on written interrogatories and may reduce his answers to writing and require him to sign them, and any writing so signed may be used in evidence in any legal proceedings against him.

(3) The Court may require him to produce any books and papers in his custody or power relating to the company, but where he claims any lien on books or papers the production shall be...