Re Pinkroccade Educational Services Pte Ltd (formerly known as PDA Pink Elephant Pte Ltd)(in creditors' voluntary winding up)

JurisdictionSingapore
JudgeLee Seiu Kin JC
Judgment Date21 August 2002
Neutral Citation[2002] SGHC 186
Docket NumberOriginating Summons No 529 of 2002
Date21 August 2002
Published date19 September 2003
Year2002
Plaintiff CounselManoj Sandrasegara and Jaime Tey (Drew & Napier LLC)
Citation[2002] SGHC 186
Defendant CounselLawrence Quahe and Yeo Khung Chye (Harry Elias Partnership)
CourtHigh Court (Singapore)
Subject MatterPrinciple in Ex p James,Conditions to fulfil before granting of sanction,Whether conscionable for company to keep moneys,Whether principle applicable,Separation of moneys from company's other moneys,Companies,Winding up,Claimants notifying company of mistake before winding up,Whether to impose constructive trust on company,Liquidators' application for court's sanction to refund moneys mistakenly paid to company in liquidation,Trusts,Mistaken payment of moneys to company in liquidation,Constructive trusts

Judgment

GROUNDS OF DECISION Cur Adv Vult

1 This is an application by Liquidators of the Company under s 310(1)(a) of the Companies Act. The Liquidators ask for the following substantive order:

"that the Court sanction the payment of AUD112,472.00 by the Company to P.T. HM Sampoerna TBK"

2 The Claimant, P.T. HM Sampoerna TBK, is a public company in Indonesia in the business of manufacturing, distribution and sale of tobacco and tobacco-related products. Sometime in 1991 the Claimant engaged an Australian company, Pink Elephant International Pty Ltd ("PEI"), to conduct courses for its staff in Indonesia. PEI has some connection with the Company but they are separate entities. After the courses were conducted, PEI rendered an invoice to the Claimant on 19 December 2001. This was sent to the Claimant’s office in Singapore and is for the sum of AUD135,608.00. The Claimant instructed its bank to make payment of AUD112,472.00 on the invoice. But the instruction mistakenly cited the bank account of the Company instead of PEI. It turned out that the Claimant had prior dealings with the Company and its bank account information was stored in the Claimant’s computer records. The mistake was made by human error, presumably due to the similarity in the names. In the event, the Claimant’s bank paid the sum of AUD112,472.00 ("the Monies") into the bank account of the Company on 30 January 2002. As no payment was received by PEI, its representative contacted the Claimant on 8 February to inquire about it. It was then that the Claimant realised that it had made the payment to the wrong account.

3 Meanwhile, things had been going badly for the Company. By January 2002 it was already insolvent and the directors had decided to go for a voluntary winding up. The eventual Liquidators, Mr Michael Ng Wei Teck and Mr Neo Ban Chuan of the accounting firm KPMG Singapore ("KPMG"), were brought into the picture by early March 2002. It was at this time that the Claimant came in contact with the Liquidators-to-be. The Claimant had asked PEI for assistance in obtaining a refund of the Monies from the Company and was referred to KPMG. There followed a number of communications between the Claimant and KPMG. It is not clear from the affidavits how the first contact was initiated, but on 8 March 2002, Mr Phillip Reynolds of KPMG sent an e-mail to the Claimant’s Efiana Chressida requesting for a statement of the exact sequence of events behind the mistaken payment so that KPMG would "have all the facts to pass onto the lawyers." In response to this, the Claimant sent a letter to Reynolds on 12 March 2002 which described the circumstances that I have outlined above. The letter ended with a request to refund the Monies by transferring it to the Claimant’s bank account with ABN Amro Bank N.V. in Surabaya, Indonesia.

4 On 18 March 2002 the Company passed a special resolution to be wound up voluntarily pursuant to s 290(1)(b) of the Companies Act and the Liquidators were duly appointed. The Claimants then instructed M/s Harry Elias Partnership ("HEP") on the matter. On 3 April HEP wrote to the Liquidators to demand the return of the money. The Liquidators’ solicitors, M/s Drew & Napier LLC ("DN") replied on 5 April and requested for a week to obtain their clients’ instructions. Very properly, DN confirmed that in the meantime the Liquidators would not draw down on the money. The parties eventually agreed to take out this application for a determination as to the Claimant’s rights in respect of the Monies. Because the payment was made in Australian currency, the Monies have throughout been kept separate and identifiable from the other funds of the Company.

5 The Claimant based its claim on two alternative grounds:

(1) on the principle in Ex parte James; and

(2) on the basis that the Company is a constructive trustee of the Monies.

The Ex parte James principle

6 Counsel for the Claimant, Mr Quahe, submitted that on the principle in Ex parte James, re Condon (1874) LR 9 Ch App, the Court ought to order the Liquidators to refund the Monies. In Re PCChip Computer Manufacturer (S) Pte Ltd [2001] 3 SLR 296, I had applied the principle in Ex parte James and ordered the Liquidators to refund a sum of money mistakenly paid by the bank to them in the course of the winding up of the company. In coming to that decision I had been guided by the four conditions suggested by Walton J in In re Clark (A Bankrupt), Ex parte The Trustee v Texaco Ltd [1975] 1 WLR 559, viz:

(i) There must be some form of enrichment of the assets of the bankrupt by the claimant;

(ii) The claimant must not be in a position to submit an ordinary proof of debt;

(iii) In all the circumstances of the case an honest person would consider that it would only be fair to return the money to the claimant; and

(iv) The principle applies only to the extent necessary to nullify the enrichment of the estate.

Mr Quahe submitted that all four conditions were met in the present case and therefore the Court ought to make a similar order.

7 I pointed out to Mr Quahe that condition (ii), i.e. that the claimant must not be in a position to submit an ordinary proof of debt, was not met in the present case. This is because the payment of the Monies was made before the Company passed the special resolution for winding up. In Re PCChip, although the bank had mistakenly credited the company’s account before the winding up order was made, the money was paid over to the liquidators only after the winding up order. Merely to credit the company’s bank account does not tantamount a payment as it is in the nature of the banking relationship that this only reflects a debt owed by the bank to its client.

8 However as I had pointed out in Re PCChip (at 36), the four conditions distilled by Walton J in In re Clark are not rigid rules of law because the principle in Ex parte James is a statement of general policy. While those conditions are useful as a guide to the application of the principle, especially in a border-line situation, the failure to meet one or more conditions does not by itself determine the matter.

9 The more important factor that distinguishes the present case from Re PCChip is the fact that here the Company is being wound up voluntarily. The Liquidators are not appointed by the Court but by resolution of the Company. Mr Quahe urged that there should not be any distinction drawn between liquidators appointed by the Court and those appointed by special resolution of the company. Indeed support for his position can be found in (2001) 2 SAL Ann Rev at 14.23 in which the learned reviewer stated as follows:

14.23 Another consequence is that, according to the English courts, the application of the principle is restricted only to court-appointed liquidators and does not apply to liquidators conducting a voluntary liquidation (Re T H Knitwear (Wholesale) Ltd [1988] 2 WLR 276). This is anomalous given that, in reality, the roles and responsibilities of a liquidator in both types of winding up are similar to a very large extent, not to mention the awkward implication that a liquidator of a voluntary winding up need not act honourably. Neither is it clear why the legal result should differ according to whether a recipient of a payment made under a mistake is in compulsory or voluntary liquidation. Notably, there is an Australian authority which has held that the Ex parte James principle applies to both types of liquidators (Re Autolook Pty Ltd (1983) 8 ACLR 419).

10 Unfortunately the existence of an anomaly cannot grant the Court a jurisdiction that it otherwise does not have. In the cases where the Ex parte James principle has been applied, jurisdiction is founded on the fact the liquidator is appointed by the Court pursuant to its statutory powers under the Companies Act. The liquidator acts under the supervision and direction of the Court which will not permit him to exercise his powers unconscionably. This principle has been developed by the Courts in response to situations where injustice could otherwise result. The fact that the Court would be unable to apply this principle in the case of a voluntary liquidation does not make it any less valid.

11 The decision of the Supreme Court of New South Wales in Re Autolook Pty Ltd (1983) 8 ACLR 419 represents a very interesting application of the Ex parte James principle. The liquidator there had applied to the court for directions as to whether he ought to disclose to the Commissioner of Taxation information he had uncovered in the course of his examination of the company’s officers which indicated that the income of the company was probably much higher than was disclosed in the documents that he had earlier...

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4 cases
  • Korea Asset Management Corp v Daewoo Singapore Pte Ltd (in liquidation)
    • Singapore
    • High Court (Singapore)
    • February 16, 2004
    ...up. While this point was not argued before me, I should at least advert to it. The court in Re Pinkroccade Educational Services Pte Ltd [2002] 4 SLR 867 appeared to accept that liquidators in voluntary liquidation have less exacting obligations than court liquidators appointed pursuant to a......
  • Ho Yew Kong v ERC Holdings Pte Ltd and another
    • Singapore
    • High Court (Singapore)
    • November 27, 2018
    ...case of Re Pinkroccade Educational Services Pte Ltd (formerly known as PDA Pink Elephant Pte Ltd) (in creditors’ voluntary winding up) [2002] 2 SLR(R) 789 (“Pinkroccade”) to mount the argument that a constructive trust had arisen over the $1,000,000. Pinkroccade was a case involving a claim......
  • Public Prosecutor v Chow Wai Lam
    • Singapore
    • District Court (Singapore)
    • January 3, 2006
    ...resided with some other party, did not amount to disposition of property under the Act. b) In Re Pinkroccade Educational Services [2002] 4 SLR 867, the claimants mistakenly paid monies into the bank account of PES which were kept separate and unmixed. Subsequently, PES was wound up voluntar......
  • Korea Asset Management Corp v Daewoo Singapore Pte Ltd (in liquidation)
    • Singapore
    • High Court (Singapore)
    • February 16, 2004
    ...up. While this point was not argued before me, I should at least advert to it. The court in Re Pinkroccade Educational Services Pte Ltd [2002] 4 SLR 867 appeared to accept that liquidators in voluntary liquidation have less exacting obligations than court liquidators appointed pursuant to a......
7 books & journal articles
  • Restitution
    • Singapore
    • Singapore Academy of Law Annual Review No. 2007, December 2007
    • December 1, 2007
    ...Girozentrale v Islington London Borough Council[1996] AC 669 at 715, and applied in Re Pinkroccade Educational Services Pte Ltd[2002] 4 SLR 867) did not appear to have been pressed, unless it had been argued as part of the case of the remedial restitutionary constructive trust. It has been ......
  • Insolvency Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2004, December 2004
    • December 1, 2004
    ...do what is really honest, including refunding moneys paid to him under a mistake of law. In Re Pinkroccade Educational Services Pte Ltd[2002] 4 SLR 867 (‘Re Pinkroccade’), the High Court held that the principle in Ex parte James did not apply to voluntary liquidators but only to court-appoi......
  • Restitution
    • Singapore
    • Singapore Academy of Law Annual Review No. 2002, December 2002
    • December 1, 2002
    ...These are Caltong (Australia) Pty Ltd v Tong Tien See Construction Pte Ltd[2002] 3 SLR 241; Re Pinkroccade Educational Services Pte Ltd[2002] 4 SLR 867; and Malaysian International Trading Corp Sdn Bhd v Interamerica Asia Pte Ltd[2002] 4 SLR 537. The reader is directed to the full discussio......
  • Equity and Trust
    • Singapore
    • Singapore Academy of Law Annual Review No. 2002, December 2002
    • December 1, 2002
    ...not apply as between a man and his mistress. Constructive trust for mistaken payments 12.26 Re Pinkroccade Educational Services Pte Ltd [2002] 4 SLR 867 is a case that will prove interesting to both insolvency practitioners and equity lawyers. For the purposes of equity and trust, the impor......
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