Re China Underwriters Life and General Insurance Co Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong JC
• Judgment Date: 19 January 1988
• Neutral Citation: [1988] SGHC 5
• Docket Number: Originating Summons No 12 of 1987
• Date: 19 January 1988
• Year: 1988
• Published date: 19 September 2003
• Plaintiff Counsel: Joseph Ang and Tang Khin Wah (Lee & Lee)
• Citation: [1988] SGHC 5
• Defendant Counsel: Ruth Kao (Ruth Kao),TT Rajah and VK Rajah (Rajah & Tam)
• Court: High Court (Singapore)
• Subject Matter: Whether foreign liquidator cn invoke court's jurisdiction,Foreign liquidator applying for court-ordered examination of persons connected with company being wound up,'Liquidator',Foreign companies,s 377(2)(b) Companies Act (Cap 50),ss 285, 286 & 377 Companies Act (Cap 50),Words and Phrases,Companies

Cur Adv Vult

This is an application made by way of an originating summons under O 88 r 2(1) of the Rules of the Supreme Court (the 1970 Rules). It is made by the plaintiff; the Official Receiver of Hong Kong acting as liquidator of China Underwriters Life and General Insurance Co Ltd (in liquidation) (hereafter called `China Insurance`), for the exercise of the court`s power under s 285 of the Companies Act (Cap 50) (the Act) for the following orders:

(1) the first and second defendants may be examined on oath concerning the promotion, formation, trade dealings, affairs or property of China Underwriters Life and General Insurance Co Ltd (in liquidation) (the company) and to produce all books and papers in their custody or power relating to the company;

(2) the third defendants and/or their responsible representative/officers may be examined on oath concerning the promotion, formation, trade dealings, affairs or property of the company and to produce all books and papers in their/his custody or power relating to the company.

China Insurance was incorporated in Hong Kong on 21 January 1924. It was registered as a foreign company in Singapore on 15 December 1980 and was also registered by the Monetary Authority of Singapore under the Insurance Act (Cap 193, 1970 Ed) to carry on insurance business in Singapore.

In 1981, ownership and control of China Insurance was acquired by Carrian Investments Ltd (CIL), a company incorporated in Hong Kong. CIL was a member of the Carrian group of companies which was controlled by one George Tan.

After CIL had acquired control of China Insurance in 1981, new directors from the Carrian group were appointed to its board of directors including (a) Jed Tan (ie the second defendant); (b) Bentley Ho; (c) Kenneth Kao; (d) John Marshall; and (e) Rodney Bell.

Kenneth Kao was the son of the first defendant who was a deputy general manager of the third defendants until 31 May 1982 when (as alleged by the third defendants) he retired. The first defendant was also the father-in-law of George Tan, the man who headed the Carrian group. The second defendant was a brother of George Tan and a director of many companies in the Carrian Group.

At this time, China Insurance owned the whole of the 12th floor, International Plaza, Singapore 0207 which was valued at about $15,600,000. The said property was then not mortgaged or otherwise encumbered.

The Carrian group of companies collapsed in a spectacular manner in 1982 following which China Insurance was wound up on 7 May 1984 by the High Court in Hong Kong under the Companies Ordinance upon the petition of the Governor as the Insurance Authority for the purpose of the Insurance Companies Ordinance 1983 and the Official Receiver of Hong Kong was appointed the liquidator on 9 May 1984.

China Insurance has not been wound up as a foreign company in Singapore and therefore no liquidator for Singapore has been appointed by the court.

In the course of investigating the affairs of China Insurance, the plaintiff has apparently discovered that two loans totalling $25m obtained in July 1982 by China Insurance from the third defendants have been used not for its benefit but for the benefit of other companies in the Carrian group and that the proceeds of such loans and the properties given to secure such loans (as to $9m, by a mortgage of its property being the 12th floor of International Plaza and as to $16m, by a pledge over its time deposit for a like amount with the third defendants) are now irrecoverable.

The plaintiff has attempted to obtain information from the third defendants as to the identities of the persons who negotiated the loans and the purpose for which the loans were taken. The third defendants have given the information requested as was within their present knowledge, as the deputy general manager who negotiated the loans has returned to China. But the plaintiff was not satisfied with the said information and has accordingly taken out this application.

The plaintiff`s application is made in the belief that the directors involved in the arrangement of the loans and their subsequent diversion for use by other companies were in breach of their duties and that, given the circumstances of this case, and in particular the familial relationships of the persons alleged to have been involved in the negotiations of the loan, there was a likelihood that the officers of the third defendants had knowledge of such breaches of duty by the directors of China Insurance in misapplying its funds. The third defendants and the first defendant have denied strongly this allegation or suggestion and have also asserted they have no information or records which could assist the plaintiff in this respect.

The third defendants have produced documentary evidence that the two loans were drawn down by China Insurance on 15 June 1982 (for $16m) and 18 June 1982 (for $9m) through its current account and that on 29 July 1982 the overdraft in the said account had been reduced to zero. The plaintiff has not produced any further evidence on what happened after 29 July 1982 to cause the loss of the $25m and the securities.

At the hearing before me, both counsel for the third defendants and for the first defendant raised a preliminary issue that this court has no jurisdiction or power under s 285 to make an order in terms of this application as China Insurance is not a company to which that s could apply. As this issue went to the root of the jurisdiction of the court, I decided to hear and consider it first and to defer the hearing of the application on its substance.

Section 285 of the Act provides as follows:

(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 sub-s (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 without prejudice to that lien, and the court shall have jurisdiction to determine all questions relating to that lien.

(4) An examination under this section or s 286 may, if the court so directs and subject to the rules, be held before any District Judge named for the purpose by the court, and the powers of the court under this section and s 286 may be exercised by that judge.

(5) If any person so summoned, after being tendered a reasonable sum for his expenses, refuses to come before the court at the time appointed, not having a lawful excuse made known to the court at the time of its sitting and allowed by it, the court may cause him to be apprehended and brought before the court for examination.

As s 286 is, in my view, also relevant to the determination of the scope of s 285, its relevant provisions are also reproduced below. It reads:

(1) Where the liquidator has made a report under this Part stating that, in his opinion, a fraud has been committed or that any material fact has been concealed by any person in the promotion or formation of the company or by any officer in relation to the company since its formation or that any officer of the company has failed to act honestly or diligently or has been guilty of any impropriety or recklessness in relation to the affairs of the company, the court may, after consideration of the report, direct that the person or officer, or any other person who was previously an officer of the company, including any banker, solicitor or auditor, or who is known or suspected to have in his possession any property of the company or is 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, shall attend before the court on a day appointed and be publicly examined as to the promotion or formation or the conduct of the business of the company, or in the case of an officer or former officer as to his conduct and dealings as an officer thereof.

(2) The liquidator and any creditor or contributory may take part in the examination either personally or by a solicitor.

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Sections 285 and 286 both refer to `the company` which expression is statutorily defined as a company incorporated pursuant to the Act or...