Pac Asian Services Pte Ltd v European Asian Bank AG

JurisdictionSingapore
JudgeA P Rajah J
Judgment Date12 January 1987
Neutral Citation[1987] SGCA 1
Docket NumberCivil Appeal No 27 of 1986
Date12 January 1987
Published date19 September 2003
Year1987
Plaintiff CounselLeolin Price QC, Manjit Singh and Juliet Toh (Manjit Darshan & Partners)
Citation[1987] SGCA 1
Defendant CounselChristopher Bathurst QC and Wong Meng Meng (Shook Lin & Bok)
CourtCourt of Appeal (Singapore)
Subject MatterRule 191 Companies (Winding-up) Rules 1969,Companies,Winding up,Whether reliance on deeming provision in s 254 (2)(a) Companies Act requires strict compliance with conditions of s 254 (2) (a),Whether irregular service of statutory demand curable by s 392 of Companies Act or Rule 191 of Companies (Winding-up) Rules 1969,Necessity for service of petition before hearing of petition,Whether any basis for appointment of provisional liquidator,Companies Act (Cap 185, 1970 Ed) ss 254(1)(e), 254 (2)(a), 267 & 392,Grounds to justify appointment,Appointment of provisional liquidators

On 23 January 1986, the respondent, European Asian Bank Aktiengesellschaft (the bank), presented a winding-up petition against the appellant, Pac Asian Services Pte Ltd (the company). The petition was to be heard on 2 May 1986. On 24 January 1986, the bank made an ex parte application under s 267 of the Companies Act (Cap 185, 1970 Ed) for an order appointing provisional liquidators which was heard and granted by FA Chua J. The orders also contained the usual undertaking as to damages.

On 18 February 1986, the company filed an application for an order:

(a) that the order made herein on 23 January 1986 for the appointment of provisional liquidators of Pac Asian Services Pte Ltd be discharged;

(b) that there be an inquiry as to damages and the petitioner do pay Pac Asian Services Pte Ltd damages so assessed;

(c) that the petition herein be dismissed; and

(d) that the costs of this petition, including the costs of and incidental to this application, be taxed and paid by the petitioner to Pac Asian Services Pte Ltd.



The date in prayer (a) should have read 24 January 1986, and not 23 January 1986.
The bank then took out an application for leave to amend the petition.

Both applications were heard by Lai Kew Chai J on 7 and 8 April 1986.
The learned judge, in a succinct judgment, dismissed the company`s application with costs and granted the bank leave to amend the petition. This appeal by the company is in respect of Lai Kew Chai J`s orders. The hearing of the petition (since amended) has been adjourned pending the outcome of this appeal.

We heard the arguments on 8, 9 and 10 October 1986 and on 16 October 1986 we made the following orders:

(1) The appeal against the decision of Lai Kew Chai J affirming Chua J`s order of 24 January 1986 is allowed. Accordingly, the order of 24 January 1986 of FA Chua J appointing provisional liquidators is hereby discharged.

(2) There will be an inquiry as to damages and the bank is to pay the company damages to be assessed, such inquiry and assessment to be conducted by the registrar.

(3) The order made by Lai Kew Chai J granting leave to amend the petition is affirmed and accordingly the appeal against this part of Lai Kew Chai`s J`s order is dismissed.

(4) The order of Lai Kew Chai J that the costs of the application to amend be the company`s costs in any event is to stand.

(5) The bank, the respondent, is to pay the company two- thirds of the company`s taxed costs here and below.

(6) The deposit paid as security for costs of the appeal to be paid out to the company (appellants) or its solicitors.



We now give our reasons.
The arguments advanced by counsel on behalf of the appellant were:

(1) the petition as presented on 23 January 1986 was defective and incurably so; it could not therefore support the interlocutory appointment of provisional liquidators;

(2) the affidavit in support of the ex parte application for the order appointing provisional liquidators did not comply with the standard of candour and accuracy required in such an application;

(3) the ex parte application must be seen in the light of the evidence and the petition before the court on 24 January 1986 and justification could not be sought ex post facto, especially from the provisional liquidators` report which was said to be suspect;

(4) the amendment of the petition should have been refused, with liberty to the bank to commence a fresh petition. In any event, the amendment could not validate retrospectively the improper appointment of the provisional liquidators.



We will now deal with these arguments.
Was the petition presented on 23 January 1986 defective?

The material contents of the winding-up petition as it stood on presentation on 23 January 1986 read:

The humble petition of European Asian Bank Aktiengesellschaft, a banking company incorporated with limited liability in the Federal Republic of Germany and having a place of business in Singapore at 50 Rates Place, Shell Tower, Singapore 0104.

(1) Pac Asian Services Pte Ltd (hereinafter called the company) was on 14 September 1972 incorporated under the Companies Act (Cap 185, 1970 Ed).

(2) The registered office of the company is at 10 Anson Road, #17-15, International Plaza, Singapore 0207.

(3) The nominal capital of the company is $1,000,000 divided into 1,000,000 shares of $1 each. The amount of the capital paid up or credited as paid up is $1,000,000.

(4) The objects for which the company was established are as follows:

(a) engineers and electricians.

(b) To carry on the business of travel agents, tourist agents and contractors, cable and telegraph companies` agents, bankers, banking, insurance, forwarding and general agents, aircraft and ship owners and charterers, agents for operators of air, sea, land or inland waterway carriage undertakings, road transport owners and hirers, hotel, apartment and lodging-house keepers, caterers and storekeepers, and generally to facilitate travelling, and to provide for tourists and travellers or promote the provision of facilities of every description, and in particular by means of the booking of travel tickets and accommodation and hotel and lodging accommodation, providing guides, safe deposits, inquiry bureaux and baggage transport, and arranging the operating tours.

(c) ... to act as freight, passenger and ticket agent and broker for steamship and railroad companies, and other carriers of passengers or goods; and other objects set forth in the memorandum of association thereof.

(5) The company is indebted to your petitioners in the sum of $3,240,124.03 claimed by them as being the amount due and owing from the said company to the petitioners.

(6) On 21 December 1985 your petitioners, through their solicitors, served on the company by hand at their office a letter of demand requiring the company to pay the said sum of $3,056,626.95 which demand was in the following terms:

`Take Notice that we, Messrs Shook Lin & Bok of No 2 Battery Road, #06-00, Malayan Bank Chambers, Singapore 0104, solicitors for the European Asian Bank hereby require you to pay to our clients the sum of $3,056,626.95 being the amount due and owing from you to our clients together with interest thereon.



And Take Further Notice that in the event of your failure and/or refusal to make payment of the aforesaid sum to our clients or to us within three (3) weeks from the date of receipt of this demand, we shall, on behalf of our clients, petition for you to be wound up by the court under the ground, provided for in s 254(1)(e) read with s 254(2)(a) of the Companies Act (Cap 185, 1970 Ed), namely, that you are unable to pay your debts.


Please note that this notice is only for purpose of s 254(2)(a) of the Companies Act and shall not in any way affect our clients`letter of demand dated 9 December 1985 and any proceedings taken pursuant to that letter including any petition for winding up.
`

(7) More than three weeks have now lapsed since your petitioners served the said demand but the said company has not made payment of the sum and has neglected to make any satisfactory offer to your petitioners to secure or compound the same. Your petitioners have received a sum of $180,000 which represents the amount realized by the company from the sale of certain assets charged to your petitioners by the company to secure its indebtedness.

(8) Further, since the date of the said demand, the company`s indebtedness to your petitioners has increased by a further sum of $318,402 being the amount paid by the petitioners under a banker`s guarantee given by the petitioners to one Sabena Belgian World Airlines, at the company`s request, guaranteeing to Sabena Belgian World Airlines repayment by the company to them of the sum due to them by the company.

(9) The company is deemed to be insolvent and unable to pay its debts. Alternatively, the company is insolvent and unable to pay its debts.

(10) In the circumstances, it is just and equitable that the company be wound up.



Your petitioners therefore humbly pray as follows:

(a) That Pac Asian Services Pte Ltd may be wound up by the court under the provisions of the Companies Act (Cap 185).

(b) That Mr Jefferey Heng, Mr Wong Yew Meng and Mr Roger Edmonds be appointed as the liquidators of the company.

(c) That the petitioners` costs in the proceedings herein be taxed and paid by the company.

(d) Such other order as this honourable court may deemed necessary.



The appellant submitted that:

(1) the petition was wholly defective in so far as it pended on the statutory demand of 21 December 1985, as that demand had not been served at the registered office of the company;

(2) the petition was defective without the benefit of the deeming provision, as the respondent was alleging that the company was unable to pay its debts without supporting assertions of fact to substantiate the allegation;

(3) the petition was doubly bad as it was not served on the company as at 24 January 1986. For this proposition, they rely on r 25 of the Companies (Winding-Up) Rules 1969.



We will dispose of the third point first.
The appellant`s argument on this point is untenable as r 25 must mean service before the hearing of the petition and not service before the hearing of an ex parte application.

The bank`s petition was substantially founded on s 254(1)(e) read with s 254(2)(a) of the Companies Act.
Section 254(1) reads:

The Court may order the winding up if ...

(e) the company is unable to pay its debts;



Section 254(2) is in the following terms:

A company shall be deemed to be unable to pay its debts if

(a) a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding $500 then due has served on the company by leaving at the registered office a demand under his hand or under the hand of his agent thereunto lawfully authorized requiring the company to pay the sum so due, and the
...

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6 cases
  • Jumabhoy Asad v Aw Cheok Huat Mick and Others
    • Singapore
    • Court of Appeal (Singapore)
    • 31 July 2003
    ...being previously an officer of the company. 18 Reliance was also placed on the case of Pac Asian Services Pte Ltd v European Asian Bank AG [1987] SLR 1 which related to the appointment of provisional liquidators and where the appeal was heard before a quorum of three judges. With respect, t......
  • Re Dayang Construction and Engineering Pte Ltd
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    ......Insurance Plc v Improvement Services Ltd And Others [1986] 1 WLR 114 and Taylors. Industrial ... . Malayan Plant (Pte) Ltd v Moscow Narodny Bank Ltd [1980] 2 MLJ 53 (refd). . Pac Asian Services Pte td v European Asian Bank AG [1989] 3 MLJ 385 (refd). . Re Simpson ......
  • Jumabhoy Asad v Aw Cheok Huat Mick and Others
    • Singapore
    • Court of Three Judges (Singapore)
    • 31 July 2003
    ...being previously an officer of the company. 18 Reliance was also placed on the case of Pac Asian Services Pte Ltd v European Asian Bank AG [1987] SLR 1 which related to the appointment of provisional liquidators and where the appeal was heard before a quorum of three judges. With respect, t......
  • Sinfeng Marine Services Pte Ltd v Taylor, Joshua James and another and other appeals
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    • Court of Appeal (Singapore)
    • 9 October 2020
    ...was remedied under s 392(2) of the CA and r 191(1) of the CWU Rules (at [50]). In Pan-Asian Services Pte Ltd v European Asian Bank AG [1987] SLR(R) 6, the creditor’s statutory demand had not been served at the company’s registered office as required under s 254(2)(a) of the CA before a comp......
  • Request a trial to view additional results
1 books & journal articles
  • Insolvency Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2002, December 2002
    • 1 December 2002
    ...the deemed insolvency advantages there must be strict compliance with s 254(2)(a) (Pac Asian Services Pte Ltd v European Asian Bank AG[1987] SLR 1 at 7). However, that case dealt with the issue of the proper service of a demand, which rightly should attract a strict approach. It is submitte......

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