Re Mohamed Yunus Valibhoy

• Jurisdiction: Singapore
• Judgment Date: 28 September 1994
• Date: 28 September 1994
• Docket Number: Bankruptcy No 1502 of 1984 (Summons in Chambers No B/254 of 1994)
• Court: High Court (Singapore)

Re Mohamed Yunus Valibhoy, ex parte Bank of Credit and Commerce Hong Kong Ltd

[1994] SGHC 243

Lai Siu Chiu J

Bankruptcy No 1502 of 1984 (Summons in Chambers No B/254 of 1994)

High Court

Insolvency Law–Bankruptcy–Bankruptcy order–Debt in foreign currency–Whether Official Assignee correct to make payment in Singapore dollar equivalent of foreign currency at exchange rate prevailing when adjudication and receiving orders were made–Insolvency Law–Bankruptcy–Bankruptcy order–Interest on debts–Payment of interest from bankrupt's surplus estate–How rate of interest to be determined–Sections 43 (7) and 43 (8) Bankruptcy Act (Cap 20, 1985 Rev Ed)–Insolvency Law–Bankruptcy–Bankruptcy order–Proof of debt–Review of adjudication by Official Assignee–Whether court should interfere with decision of Official Assignee–Section 86 Bankruptcy Act (Cap 20, 1985 Rev Ed)

The applicant was adjudicated a bankrupt by the respondent bank (“the bank”) on 12 July 1985. The bank then filed a proof of debt for US$3,271,349.80 based on six consent judgments, and the Official Assignee (“the OA”) adjudicated the proof and admitted the sum of US$2,855,002.51 therein on 5 May 1988. The bank was subsequently placed in provisional liquidation on 17 July 1991 and special managers were appointed. Subsequently, the special managers sent the applicant a letter in August 1992 erroneously stating that his total indebtedness to the bank was US$3,322,679.90 as of 17 July 1991. The applicant consequently asked the OA if she was prepared to review the adjudication of the bank's proof in May 1988, but the OA replied that there was no question of disputing the validity of the proof. In the meantime, the applicant had made numerous attempts to impugn or set aside one of the consent judgments (“the principal judgment”) and the receiving and adjudication orders made thereon.

The applicant applied, inter alia, for the adjudicated sum of US$2,855,002.51 in May 1988 to be reversed or modified. He submitted that his application was made under s 86 of the Bankruptcy Act (Cap 20, 1985 Rev Ed), as he was a person aggrieved by the decision of the OA not to review the adjudication. He further contended that the bank was entitled to interest of only 4% from the date of the receiving order, to be paid out of his surplus estate; and that the bank was entitled only to receive payment in US dollars, with no regard for fluctuations in exchange rates.

Held, dismissing the application:

(1) The applicant was once again attempting, under a different guise, to set aside or go behind the principal judgment and his complaints against the OA were entirely without merit; he was abusing the process of the court. Every issue brought up by counsel for the applicant in relation to the application had been canvassed previously either before the OA at the lengthy adjudication or before some other forum or judge: at [41] and [49].

(2) The bank had explained the reason for the administrative error contained in the letter of August 1992 which had been sent to the applicant. The amounts owing by the applicant could not be as at 17 July 1991, when the bank went into liquidation, since he had been adjudicated a bankrupt some six years earlier. The special managers had made an obvious error in the letter - the amounts were owed not as at 17 July 1991 but as at the date of the adjudication and receiving orders (12 July 1985): at [47].

(3) It was right and proper for the OA to make payment to the bank on the proof in the Singapore dollar equivalent of the US dollars at the exchange rate prevailing on the date the adjudication and receiving orders were made and let the loss incurred in the process lie where it fell, namely, on the applicant: at [59].

(4) By virtue of the operation of s 43 (7) and the proviso to s 43 (8) of the Bankruptcy Act, the OA was entitled to pay interest from the applicant's surplus estate firstly at the rate of 4% per annum on the amount proved and secondly at the bank's contractual rate up to 12 July 1985: at [60].

Benoist, In re [1909] 2 KB 784 (folld)

Browne (a bankrupt) Re; Ex parte Official Receiver v Thompson [1960] 1 WLR 692; [1960] 2 All ER 625 (refd)

Customs & Excise Commissioners v J H Corbitt (Numismatists) Ltd [1981] AC 22 (refd)

Debtor, In re A;Ex parte The Debtor v Dodwell (The Trustee) [1949] Ch 236 (folld)

European Central Railway Company, In re; Ex parte Oriental Financial Corporation (1876-77) 4 Ch D 33 (refd)

Fewings, Ex parte; In re Sneyd (1884) 25 Ch D 338 (refd)

Humber Ironworks and Shipbuilding Company,In re (1869) LR 4 Ch App 643 (refd)

Hunter v Chief Constable of the West Midlands Police [1982] AC 529; [1981] 3 WLR 906 (folld)

John Black, Re (1907) 24 WN (NSW) 189 (folld)

Leon v York-O-Matic Ltd [1966] 1 WLR 1450 (refd)

Lines Bros Ltd (in liquidation), In re [1983] Ch 1 (folld)

Martin Lee, Re; Ex parte Ban Hin Lee Bank Ltd [1964] MLJ 259 (refd)

Miliangos v George Frank (Textiles) Ltd [1976] AC 443 (refd)

Bankruptcy Act (Cap 20,1985 Rev Ed)ss 43 (7), 43 (8), 86 (consd);s 43 (6)

S B Shah and Y R Jumabhoy (SB Shah) for the applicant

V K Rajah and Loh Hsiu Lien (Rajah & Tann) for the judgment creditors

Lee Poh Choo for the Official Assignee.

Lai Siu Chiu J

1 The abovenamed Mohamed Yunus Valibhoy (“the bankrupt”) applied by summons in chambers entered No B/254 of 1994 (“the application”) for the following orders:

(a) that the sum of US$2,885,002.51 being the adjudicated sum admitted by the Official Assignee in May 1988 pursuant to the proof of debt (“the proof”) filed by the Hong Kong Metropolitan Bank Ltd now known as Bank of Credit and Commerce Hong Kong Ltd (“the bank”) which is in liquidation, may be reversed or modified to the sum of US$3,322,679 inclusive of all interest and charges as at 17 July 1991, or such other sum as the court may upon inquiry direct;

(b) that the bank may be directed to produce all statements of accounts together with supporting documents to substantiate the sum of US$3,271,349.80 originally submitted in their proof, in the alternative the sum of US$3,322,679 inclusive of all interest and charges as at 17 July 1991;

(c) that the costs of the application may be provided for.

2 In support of the application, the bankrupt filed an affidavit stating:

(a) he was adjudicated a bankrupt by the bank on 12 July 1985;

(b) thereafter the bank filed the proof for a sum of US$3,271,349.80 based on six judgment debts five of which related to the following companies:

1. (i) Sub-Continent Shipping Pte Ltd

2. (ii) Kathiawad Shipping Pte Ltd

3. (iii) West Asia Shipping Pte Ltd

4. (iv) Falcon Navigation Pte Ltd

5. (v) Anisco Pte Ltd

of which he and his brother Mohamed Shariff Valibhoy were director and managing director respectively. He had signed blank and incomplete guarantees for these companies;

(c) in April 1987, the proof was adjudicated and he had specifically asked the Official Assignee (“OA”) to request the bank's representative for statements of account of the various debts due from him together with supporting documents; he had never been given such statements/documents before. In response to his request the bank's representative produced some handwritten statements which were admitted by the OA;

(d) thereafter the OA admitted the sum of US$2,855,002.51 for the proof after deducting a sum of US$416,347.31 credited by the bank for the sale of two vessels;

(e) the bank went into liquidation and special managers were appointed to handle the bank's affairs;

(f) in May 1992 he received a computerised statement from the joint special manager in Hong Kong together with a covering letter dated 27 March 1992 (“the March letter”) showing a sum of US$2,241,567.03 as due and owing from him as at 17 July 1991, the letter was addressed to all depositors but the statement was c/o the bank;

(g) the bank has also commenced proceedings against him in the Kuala Lumpur High Court in OS F797/1984 for the sale of his Kuala Lumpur (“KL”) property. In the KL proceedings, the bank's Singapore solicitor had affirmed an affidavit wherein he had exhibited a letter from the special managers dated 19 August 1992 (“the August letter”) which established for the first time that his total indebtedness to the bank under the six judgments was US$3,322,679.90 as at 17 July 1991. The August letter would be regarded as an admission by the bank as to the sum he actually owed them as at 17 July 1991;

(h) in December 1992 he instructed his solicitors to write to the OA to inquire whether in the light of the August letter the OA would be prepared to review the adjudication of the bank's proof made in May 1988. The OA responded to say there was no question of disputing the validity of the proof either on legality or on quantum;

(i) his solicitors further wrote to the OA to say the bank should not be overpaid in view of the August letter. His solicitor sought confirmation that the OA would not make payment of the sum of US$3,271,349.80 with interest from 1983 as it would amount to US$6,539,443.46 up to July 1991 and that he would not pay interest on the adjudicated sum of US$2,885,002.51 since with interest it would amount to US$5,768,443.46. No reply was received from the OA nor had she taken any steps to review the adjudication despite a reminder from the bankrupt's solicitor;

(j) he was seriously aggrieved by the decision of the OA in refusing to review the adjudication. The OA was holding more than S$15m representing the sale proceeds of his 14/82 shares in properties at Siang Lim Park and other properties pursuant to a court order for sale made in OS 555/1992;

(k) the only claim that had been adjudicated was the bank's and he was challenging it in view of the various discrepancies in the accounts submitted by the bank either in writing or as affirmed by the bank's solicitors. The bank should not be unduly enriched by virtue of the...