Re Pac-Asian Services Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JC
• Judgment Date: 16 December 1987
• Neutral Citation: [1987] SGHC 51
• Docket Number: Companies Winding Up No 53 of 1986
• Date: 16 December 1987
• Published date: 19 September 2003
• Year: 1987
• Plaintiff Counsel: Davinder Singh (Drew & Napier)
• Citation: [1987] SGHC 51
• Defendant Counsel: Manjit Singh (Manjit Darshan & Partners)
• Court: High Court (Singapore)
• Subject Matter: Order discharged,Whether provisional liquidators had lien over assets of the company under their control,Whether provisional liquidators could be paid their remuneration and expenses,Principles applicable,Companies,Winding up,Order of court appointing provisional liquidators,Provisional liquidator

The applicants, Jeffrey Heng, Wong Yew Meng and Roger Edmonds, were appointed by an order of court dated 24 January 1986 as provisional liquidators of the company pursuant to an ex parte application of the petitioning creditors, European Asian Bank Aktiengesellscheft (EAB), in these winding-up proceedings. The order was made subject to the usual undertaking as to damages.

The company thereafter, applied to discharge the appointment of the provisional liquidators. The application was refused. On appeal to the Court of Appeal, the appellate court allowed the appeal and discharged the order dated 24 January 1986. The Court of Appeal also ordered that there would be an inquiry by the Registrar as to the damages EAB should pay to the company. The provisional liquidators were not parties to the proceedings before the Court of Appeal. The present winding-up petition is still pending.

The questions that came before me for decision are these: In view of the discharge of the order appointing the provisional liquidators, are the provisional liquidators entitled to be paid their remuneration and expenses out of the assets of the company held by them? Do they have a lien over those assets? As counsel for the company put it, it is not in dispute that a provisional liquidator is entitled to his remuneration. The question in this case is, who is liable for the three provisional liquidators` remuneration and expenses. The company said that the provisional liquidators should look to EAB. However, the provisional liquidators contended that in law they are entitled to be paid their remuneration and expenses out of the assets of the company held by them. They also argued that as officers of the court, they are obliged to be directed by the court as to the manner in which the assets held by them are to be utilized. They further argued that the remedy for the company is to proceed against EAB, the petitioning creditors, on their undertaking on damages in respect of which the Court of Appeal has ordered an inquiry.

In the affidavit of 7 January 1987 of Lai Nai Yain filed on behalf of the company, the company also made allegations of improper discharge of duties on the part of the provisional liquidators. However, these are issues which do not concern the court at this stage.

The order of 24 January 1986 provided that the provisional liquidators shall have and may exercise all the functions and powers of a liquidator. It also stated that the salary or remuneration of the provisional liquidators be paid out of the assets of the.company pursuant to s 328(1)(a) of the Companies Act (the Act). The Court of Appeal in discharging the order of 24 January 1986 did not deal with the question of the remuneration of the provisional liquidators as that question was not put before it.

A number of authorities have been cited to me by counsel of both parties. It seems to me that the most recent case on point is Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No 2) (1986) 10 ACLR 748. That was a case of the Supreme Court of New South Wales decided by Mclelland J. In that case, a winding-up order was made and a liquidator appointed. It was subsequently discovered that as the company was incorporated in the Australian Capital Territory and not in New South Wales, the court had no power to wind-up the company. This led to two applications - one by the petitioner to set aside the winding-up order and the other by the liquidator for his remuneration. The court ordered that the liquidator`s remuneration be paid out of the assets of the company and also set aside the winding-up order. Having reviewed the earlier cases, Mclelland J said at p 751:

The setting aside of the orders of 20 November 1985 will not affect Mr Harkness`s status as a liquidator between 20 November 1985 and the date of the setting aside of those orders, as the appointment remains valid for that period ... The powers of the court under s 373 to determine the remuneration of a liquidator or provisional liquidator may be exercised before or after the termination of his appointment. It cannot be suggested, for instance, that if a winding-up order were made and a liquidator appointed, thus terminating the appointment of a provisional liquidator, the former provisional liquidator could not thereafter make application under s 373 for determination of his remuneration. It would make no difference to the existence of the power that the appointment of the provisional liquidator was terminated not by the appointment of a liquidator but by dismissal of the winding-up proceedings as in Re North Australian Properties Pty Ltd and Re Bridal Centre Co Pty Ltd (1985) 9 ACLR 481 or by setting aside the original order, as in Starr (1983) 8 ACLR 367; similarly so far as a liquidator is concerned, by setting aside the original order, as in the present case or by an order terminating or staying the winding up. Furthermore, I have little doubt that a liquidator or provisional liquidator who is entitled to remuneration would normally have an equitable lien over the assets under his administration to secure payment of that entitlement as well as his expenses, analogous to the lien to which a court-appointed receiver is entitled: Re Central Commodities Services Pty Ltd (1984) 1 NSWLR 25; 8 ACLR 801. That lien would survive the termination of his appointment.

Our equivalent to s 373 of the NSW Companies Act is s 268(2) of the Act which reads as follows:

A provisional liquidator, other than the official receiver, shall be entitled to receive such salary or remuneration by way of

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