Re Kao Lois Theresa

• Jurisdiction: Singapore
• Judgment Date: 18 October 1966
• Date: 18 October 1966
• Docket Number: Civil Appeal No 58 of 1965
• Court: Federal Court (Singapore)

Re Kao Lois Theresa, ex parte Official Assignee

[1966] SGFC 14

Wee Chong Jin CJ

,

Tan Ah Tah FJ

and

F A Chua J

Civil Appeal No 58 of 1965

Federal Court

Insolvency Law–Bankruptcy–Avoidance of transaction–Bankrupt conveying property to purchaser before bankruptcy hearing–Whether bankrupt continued in possession–Whether conveyance fraudulent–Section 3 Bankruptcy Ordinance (Cap 11, 1955 Rev Ed)

The bankrupt sold the property to the purchaser, her sister-in-law, after she was sued by some creditors and before she was adjudged a bankrupt. The Official Assignee applied to set aside the conveyance on the grounds that the conveyance was not made in good faith or for valuable consideration.

The trial judge found, among other things, that the conveyance was not made fraudulently within the meaning of s 3 (1) (b) of the Bankruptcy Ordinance (Cap 11, 1955 Rev Ed).

The Official Assignee appealed against this decision, arguing that while valuable consideration was given, fraud was indicated as the bankrupt continued to be in possession of the property and furniture after the sale, and the conveyance was expedited pending the hearing of the suit brought by the petitioning creditor. A prima facie presumption of fraud was also said to apply in respect of transfers of interests in land.

Held, dismissing the appeal:

(1) Where the conveyance is for valuable consideration, the onus of proof of fraud rests on the Official Assignee: at [11].

(2) The question of intent to defraud creditors is always one of fact which the court has to decide on the merits of each particular case after considering all the surrounding circumstances. One of the indications of fraud is the continuance of the grantor in possession of the property he has purported to alienate. Another indication is that the alienation is made after a writ has been issued against the grantor: at [11] and [12].

(3) The bankrupt was not in possession of the house or the furniture, and she had no intention of defrauding her creditors as she was selling the property to pay off some of the creditors. The trial judge had taken all relevant issues into consideration in deciding that there was no fraud in the case: at [13]to [16].

Bankruptcy Ordinance (Cap 11, 1955Rev Ed)s 3 (consd);ss 46, 51 and52

K S Chung (Chung & Co) for the appellant

Yin Ee Khing (Yin Ee Kheng) for the first respondent

R C H Lim and David Tar See (R C H Lim & Co) for the second respondent.

F A Chua J

(delivering the judgment of the court):

1 This is an appeal from a judgment of the High Court dismissing the motion of the appellant seeking a declaration that the conveyance dated 21 August 1963 made between Lois Theresa Kao (who was adjudged a bankrupt on 17 January 1964) as vendor and Leong Lai Peng, the first respondent, as purchaser of house 15 Frankel Avenue, Singapore, is void against the Official Assignee on the grounds:

(a) that the conveyance was not made in good faith or for valuable consideration;

(b) that the conveyance was an act of bankruptcy because it was fraudulent and Lois Theresa Kao's bankruptcy related back to it and her property divisible among her creditors included the said house; and, alternatively;

(c) that the conveyance was fraudulent and void against the Official Assignee; and asking for an order that the conveyance be set aside.

2 The facts are shortly these. In 1957 the bankrupt, Lois Theresa Kao, became a partner of the petitioning creditor, Chern Dercing, in a number of businesses which ultimately failed. The bankrupt purchased 15 Frankel Avenue on 15 May 1959 for $30,000. She had $18,000 and she raised the balance by mortgaging the property to the Great...