Re International Formwork & Scaffolding Pte Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
Judgment Date28 October 2013
Docket NumberCompanies Winding Up No 160 of 2012 (Summons No 2313 of 2013)
Date28 October 2013

High Court

Quentin Loh J

Companies Winding Up No 160 of 2012 (Summons No 2313 of 2013)

Re International Formwork & Scaffolding Pte Ltd

Sim Kwan Kiat, Mark Cheng Wai Yuen and Zhu Ming-Ren Wilson (Rajah & Tann LLP) for the provisional liquidators of International Formwork & Scaffolding Pte Ltd

Paul Wong and Ravin Periasamay (Rodyk & Davidson LLP) for the liquidators of International Formwork & Scaffolding Pte Ltd.

Central Commodities Services Pty Ltd, Re (1984) 8 ACLR 801 (refd)

Mellor v Mellor [1992] 1 WLR 517 (refd)

Pac-Asian Services Pte Ltd, Re [1987] SLR (R) 717; [1987] SLR 542 (folld)

Pattison v Lockwood (30 April 1998) (Federal Court of Australia) ; [1998] FCA 472 (refd)

Ronald John Dean-Willcocks v Nothintoohard Pty Ltd (2007) 25 ACLC 109 (refd)

Shirlaw v Taylor (1991) 5 ACSR 767 (refd)

Weston v Carling Constructions Pty Ltd (2000) 175 ALR 202 (refd)

Wings-Aus Holdings Pty Ltd trading as Hooters Restaurants Australia & New Zealand, Re [2009] NSWSC 667 (refd)

Companies Act (Cap 50, 2006 Rev Ed) ss 269 (1) , 328, 328 (1) (a) , 328 (3)

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) s 28 B

Companies Act 1981 (Cth) ss 441 (1) , 441 (1) (a) , 441 (1) (b)

Insolvency Law—Winding up—Provisional liquidator—Provisional liquidator's fees, costs and expenses—Whether provisional liquidator entitled to equitable lien over assets of company—Extent of provisional liquidator's equitable lien—Whether provisional liquidator's equitable lien extended to all assets of company—Whether provisional liquidator's equitable lien limited to only assets he had realised or to only assets he had preserved, protected or enhanced value of

Provisional liquidators were appointed over the company. They undertook work including reviewing its books and records, organising and accounting for all its assets, transporting its assets to alternative premises, convening a creditors' meeting, handling its employment matters, and managing the sale of some of its assets. The company was subsequently wound up and liquidators were appointed. The winding-up order expressly ordered that the liquidators were to preserve and protect the provisional liquidators' lien over the company's books and assets. The provisional liquidators sent a breakdown of their fees and expense to the liquidators. The liquidators refused to pay the provisional liquidators and requested that they be taxed. Bills of costs were filed by the provisional liquidators and the liquidators filed notices of dispute, but the latter subsequently proposed certain sums ‘in lieu of taxation’ and this was accepted. However, the liquidators still refused to make payment of these sums, writing that they would respond to the provisional liquidators only when the costs of the winding-up application had also been agreed.

The provisional liquidators thus brought an application to the court for an order that the sums for their professional fees and expenses be paid without further delay.

Held, granting the application:

(1) A provisional liquidator was entitled to an equitable lien over the assets of a company out of which he was entitled to be paid his just remuneration and expenses: at [13] .

(2) A provisional liquidator's equitable lien was one granted at general law and stood outside the statutory scheme of priority in s 328 of the Companies Act (Cap 50, 2006 Rev Ed). It was therefore was not inconsistent with the provision. It put him in a position of priority to the other unsecured creditors: at [16] .

(3) The equitable lien which a provisional liquidator was entitled to extended to all the assets of the company over which he was appointed. It was not limited to the assets which he had realised or to the specific assets which he had preserved, protected or enhanced the value of. What was enough was that the fees, costs and expenses incurred by the provisional liquidator were such which, in the final analysis, enured to the benefit of those entitled to the assets: at [31] , [33] and [35] .

Judgment reserved.

Quentin Loh J

1 The provisional liquidators of International Formwork & Scaffolding Pte Ltd (‘the Company’) bring this application, Summons No 2313 of 2013, for an order that the liquidators of the company pay them their fees and expenses incurred in the provisional liquidation of the company.

2 This application raises questions about the entitlement of a provisional liquidator to an equitable lien over the assets of the company and the extent of that equitable lien. I am told by counsel that there is no decided case in Singapore covering this point.

Facts

3 By an order of court dated 11 October 2012, Timothy James Reid, Tan Aik Kiat and Ng Yau Yee Theresa were appointed provisional liquidators (‘the Provisional Liquidators’) of the Company. The Provisional Liquidators' appointment was made, inter alia,on the back of affidavit evidence suggesting that a particular group of creditors and their related parties had made several attempts to misappropriate the Company's assets and records.

4 After their appointment, one of the Company's creditors, which was also its landlord, refused to allow the Provisional Liquidators to enter its premises to secure its assets and records. An urgent application was made to the court for an order that the landlord grant the Provisional Liquidators the access it sought. This was granted on 17 October 2012. Upon securing access to the Company's books and assets, the Provisional Liquidators carried out extensive work for the Company. They said that these included reviewing all of its books and records, organising and accounting for all of its assets against the books and records, transporting its assets to alternative premises, convening a creditors' meeting, handling its employment matters, and managing the sale of some assets.

5 On 7 November 2012, Tay Yong Kwang J made an order winding up the Company. Abuthahir Abdul Gafoor and Chee Yoh Chuang were appointed liquidators of the Company (‘the Liquidators’). In the winding-up order, it was expressly ordered that:

  1. 4. the [Provisional Liquidators'] costs and expenses including their legal fees to be agreed with the [Liquidators] failing which to be taxed and paid from the assets of the [Company]. Further, that the [Provisional Liquidators'] lien over the [Company's] books and assets be preserved and protected by the [Liquidators].

6 On 30 November 2012, a breakdown of the Provisional Liquidators' fees and expenses was provided. This amounted to S$202,270.39. One creditor, which was related to the landlord which had to be compelled by the court to allow the Provisional Liquidators access to the Company's premises, objected. The Liquidators refused to pay the Provisional Liquidators' fees and expenses, and requested that they be taxed. The Provisional Liquidators and their solicitors filed their bills for taxation on 1 February 2013 in Bill of Costs No 15 of 2013 (‘BC 15/2013’) and Bill of Costs No 18 of 2013 (‘BC 18/2013’) respectively. Notices of Dispute to both BC 15/2013 and BC 18/2013 were filed by the Liquidators on 19 February 2013. Subsequently, the Liquidators proposed by way of a letter that that the sums of S$90,000 plus disbursements and S$50,000 plus disbursements be paid ‘in lieu of taxation’ for each bill in BC 15/2013 and BC 18/2013 respectively. This was accepted by the Provisional Liquidators on 21 March 2013.

7 Pursuant to this agreement, the Provisional Liquidators wrote to the Liquidators on 1 April 2013 requesting payment of:

(a) S$97,417.67 to the Provisional Liquidators (inclusive of GST and disbursements); and

(b) S$57,324.59 to the solicitors of the Provisional Liquidators (inclusive of GST and disbursements).

However, by a letter dated 3 April 2013, the Liquidators refused to make payment of these sums, saying that they would respond only when the costs of the winding-up application have also been agreed.

The application before me

8 The...

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