Re Cheah Theam Swee

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 20 January 1996
• Neutral Citation: [1996] SGHC 8
• Citation: [1996] SGHC 8
• Defendant Counsel: Herman Jeremiah (Haridass Ho & Pnrs)
• Published date: 19 September 2003
• Plaintiff Counsel: Kenny Yap (Allen & Gledhill)
• Date: 20 January 1996
• Docket Number: Bankruptcy No 2890 of 1994
• Court: High Court (Singapore)
• Subject Matter: Jurisdiction of court,Whether enforceable by bankruptcy proceedings,Bankruptcy,s 3(3)(b) Reciprocal Enforcement of Commonwealth Judgment Act (Cap 264),Whether issue of notice related to execution,'Execution',Issue of notice,Existence of cross-claim,Insolvency Law,s 3(3) Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264),Validity,s 3(3)(b) Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264),When court could take cross-claim into consideration to set aside notice,Whether registration of foreign judgment could form basis for issuing notice of bankruptcy,Whether jurisdiction of court restricted to narrower meaning of 'execution',Civil Procedure,Foreign judgments,Notice,Words and Phrases,s 3(1)(i) Bankruptcy Act (Cap 20),Petition

Judgment:

WARREN LH KHOO J

Cur Adv Vult

This is an appeal from the decision of an assistant registrar dismissing an application by the judgment debtor Cheah Theam Swee to set aside a bankruptcy notice served on him by the judgment creditors (Equiticorp).

For the background facts, I could do no better than to take them, gratefully, from the judgment of Somers J in the New Zealand Court of Appeal in Equiticorp Finance Group Ltd v Cheah [1989] 3 NZLR 1. They are briefly as follows. Cheah was one of a consortium of seven men and one woman who combined their resources to purchase and hold investments primarily in listed companies in New Zealand. On 7 November 1986, four members of the consortium entered into two agreements, one with Euro-National Securities Ltd and one with Kupe Investments Ltd to purchase shares in Clearwood Thoroughbred Stud Ltd in exchange for shares in London Pacific Ltd. The agreements were identical except as to the number of shares in Clearwood and London Pacific. It was a term of each agreement that the purchasers would, if so required by the seller, buy back some or all of the London Pacific shares. The total number of shares in London Pacific so involved was 15 million. The combined effect of the two agreements was that the sellers could require the purchasers to buy back five million London Pacific shares on 30 June 1987 and a similar number on 30 September 1987 and 31 December 1987. In each case, the price was 71 cents per share. Equiticorp Securities Ltd (Securities) was also a party to each agreement. It agreed with Euro and Kupe respectively that if any purchaser failed to complete a repurchase of London Pacific shares, Equiticorp would do so as if they were the purchasers.

Two days earlier, on 5 November 1986, Equiticorp Holdings Ltd, one of the Equiticorp group, had agreed that Securities would underwrite the consortium`s liability to pay for the repurchase of the London Pacific Shares to the extent that Euro-National and Kupe exercised their right to require such purchase. As a term of the indemnity agreement, each member of the consortium was required to give Equiticorp joint and several guarantees supported by share mortgages over the Clearwood shares and other shares held by them in London Pacific. On 19 January 1987, a deed of covenant and indemnity between the members of the consortium as covenantors of the one part and Securities was executed. The effect of this deed was that the covenantors jointly and severally agreed to pay to Equiticorp all sums which might be paid or payable or incurred by Equiticorp to Euro-National and/or Kupe under the guarantees.

In exercise of their powers Euro-National and Kupe called upon the members of the consortium to repurchase 5 million shares in London Pacific on 30 June 1987 and a further 5 million shares on 30 September 1987. The consortium failed to pay the purchase price on each occasion, and Equiticorp was called upon to meet the sums due under its guarantee. It paid a total of NZ$3.55m on each occasion to Euro-National and Kupe. (All sums in this judgment are in New Zealand dollars unless otherwise stated.) By notice dated 28 August 1987 Equiticorp demanded from the members of the consortium the sum of $3.55m paid by Equiticorp to Euro-National and Kupe on 30 June 1987 together with interest. There was no evidence of a demand in respect of the like payment made to Euro-National and Kupe on 30 September 1987, but it was not disputed that such a demand was made. The demands not having been met, proceedings were commenced in November 1987 in the High Court in New Zealand against the members of the consortium to recover the moneys which Securities had paid together with a declaration as to the defendants` liability in respect of a further $3.55m expected to be due at the end of December 1987. Cheah not having entered appearance, summary judgment was entered on 17 December 1987 against him in the sum of $7,556,412.47 (including interest) and for the declaration claimed. The summary judgment was set aside on procedural grounds, but was affirmed by the New Zealand Court of Appeal. Upon further appeal by Cheah to the Privy Council, the Privy Council upheld the judgment against him.

There is some discrepancy in the amount of the judgment sum in the various documents before me. In the report of the judgment of the New Zealand Court of Appeal, the amount mentioned is $7,556,412.47. In the settlement agreement (of which more later), the last five digits are shown as 422.47 instead of 412.47. And in the bankruptcy notice the subject of this appeal, the last five digits are shown as 442.47. However, no point is made by the appellant about the accuracy of the bankruptcy notice in this respect. So I need not worry about it.

On 20 May 1994, Equiticorp took out a bankruptcy notice in this court based on the judgment of the New Zealand High Court. That judgment had been registered in the High Court here in accordance with the provisions of the Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264) (the Act) on 28 January 1988.

Appellant`s contentions

The appellant relies on two grounds for setting aside the bankruptcy notice. Firstly, he contends that the judgment obtained in a Commonwealth country andregistered here in accordance with the Act just mentioned cannot form the basis of a bankruptcy notice.

It is not disputed that New Zealand is a part of the Commonwealth to which the Act applies and that a judgment of the High Court of New Zealand is eligible for registration under the Act just referred to. The validity of the registration of the New Zealand High Court judgment in the instant case is therefore not in question.

Section 3(3) of the Act in so far as it is relevant provides as follows:

(a) the judgment shall, as from the date of registration, be of the same force and effect, and proceedings may be taken thereon, as if it had been a judgment originally obtained or entered upon the date of registration in the registering court;

(b) the registering court shall have the same control and jurisdiction over the judgment as it has over similar judgments given by itself, but in so far only as relates to execution under this section;

(c) ... .

Counsel for the appellant relies on para (b), and certain English cases dealing with provisions of the Judgments Extension Act 1868 which are in pari materia with the paragraph. In Re Watson [1893] 1 QB 21, the question arose whether a judgment debtor summons could be issued on the basis of an Irish judgment registered in England in accordance with the 1868 Act. All three of their lordships in the Court of Appeal noted that the Debtors Act 1869 under which the judgment debtor summons was issued had not been in existence when the Judgments Extension Act of 1868 was passed. The 1869 Act provided for imprisonment of the debtor as an alternative to an order to pay the debt by instalments. Their lordships referred to the words `but in so far only as relates to execution under this Act` in the Judgments Extension Act and held that the procedure being punitive in nature, it could not be a form of execution intended by the Judgments Extension Act. They also pointed out that s 5 of the Debtors Act provided that the imprisonment of the debtor should not deprive the creditor of his right to take out execution against the property of the debtor. They were of the view that this reinforced the view that the word `execution` in the Judgments Extension Act did not include a judgment debtor summons. They therefore held that no judgment debtor summons could be issued on the basis of a judgment registered under the Judgments Extension Act.

Re Watson was followed by another quorum of the Court of Appeal in Re A Bankruptcy Notice [1898] 1 QB 383. In that case, the question was raised whether a bankruptcy notice could be issued on the basis of a judgment registered under the Judgments Extension Act of 1868. It was held that, on the authority of Re Watson , a bankruptcy notice was clearly not a process of execution and could not be issued on the basis of such a judgment. Chitty and Collin LJJ, however, made comments to the effect that had it not been for the decision in Re Watson , they might have been disposed to decide otherwise or at least to consider the matter afresh.

In England, the position has now been settled by legislation. For by s 40 of the Administration of Justice Act 1956, a judgment summons or bankruptcy notice can now be founded on a registered judgment. However, in Singapore, the position has to be decided on a construction of the relevant provisions of the Reciprocal Enforcement of Commonwealth Judgments Act (the Act).

Re Watson is an authority emanating from an exalted tribunal in England and had until these legislative interventions been accepted there as good law for a longtime. It is of course entitled to the greatest respect. However, in two decisions of my brethren here, it has not been followed. I refer to Punch Coomaraswamy J`s judgment in Re Loo Choon Beng (Bankruptcy No 187/90) (unreported) and Lai Kew Chai J`s judgment in Re Tan Patrick, ex p Walter Peak Resorts Ltd (in receivership) [1994] 2 SLR 728 For this reason, and as I am not bound by the decision in Re Watson , I venture to consider the point afresh.

At English common law, judgments for the payment of money of a foreign court only creates a debt between the parties. It cannot be enforced as a judgment; it only provides a cause of action on which the debtor can be sued in England. It is the judgment obtained in the fresh suit in England, not the judgment originally obtained in the foreign court, which is enforceable as a judgment in England. For this purpose, judgments obtained in those parts of the United Kingdom outside England, ie Northern Ireland and Scotland, were regarded as foreign judgments.

To overcome the inconvenience of this rule, the Judgments Extension Act of 1868 was enacted. It...