Re Ritecast (S) Pte Ltd

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: G P Selvam J
• Judgment Date: 25 January 1996
• Neutral Citation: [1996] SGHC 9
• Citation: [1996] SGHC 9
• Defendant Counsel: S Santhiran (Santhiran & Pnrs)
• Plaintiff Counsel: K Bala Chandran and KL Wong (Mallal & Namazie)
• Published date: 19 September 2003
• Docket Number: Companies Winding Up No 197 of
• Date: 25 January 1996
• Subject Matter: Proof of debt,Winding up,Insolvency Law,Companies,Part payment on receipt of statutory demand,Whether petitioners or company had assumed credit risk of customer,Opposition,Grounds for petition,Petition by factoring company,Whether a relevant factor

Judgment:

GP SELVAM J

This was a petition to wind up Ritecast (S) Pte Ltd (the company). The petition was presented by a factoring company called Heller Factoring (Singapore) Ltd.

The ground relied on was that the company was indebted to the petitioners in the sum of $994,269.69 with interest at the rate of 2% above the prime rate of 7.25% from 5 May 1995. The company failed to pay the amount due and was insolvent. The petitioners` solicitors had on 8 May 1995 served by hand on the company, by placing at the registered office of the company, a demand in writing dated 8 May 1995 demanding payment of the sum of $994,269.69 and interest thereon. Despite having been allowed instalments the company defaulted in payment. The petition went on to cite that the petitioners had on 2 August 1995, through their solicitors, personally served by hand on the company, by placing at its registered office, a second demand in writing dated 2 August 1995 requesting the company to pay $831,602.49 and interest then due. The company had for a period of more than three weeks after service of the demand and immediately prior to the presentation of the petition failed to meet the relevant demand to the reasonable satisfaction of the petitioners. The amount due on 23 August 1995 was $775,408.18.

The above assertions of the petitioners were not refuted by the company. But it resisted the petition. To understand the company`s case it is necessary to trace the background to the problem.

The company had sold on credit and delivered engineering goods and products to another company called Hakua Co Pte Ltd (the customer). The total sale price of the goods was $1.62m. Then they factored their invoices to the petitioners under a factoring agreement between the petitioners and the company. The petitioners paid 80% of the price less the factoring commission to the company. In the factoring agreement the petitioners were called `the purchasers` and the company was called the `vendor`.

Clause 9 of the factoring agreement read as follows:

(1) The vendor may submit to the purchaser in advance the full name and address of any customer and all such information with regard to such customer and its business with the vendor as the purchaser may request. Upon receipt of such application and all such information as may be requested by the purchaser, the purchaser will assess the credit worthiness of the customer submitted and the risks (if any) in relation to the business transactions between the vendor and such customer and may make whatever enquiries of whatever person or enterprise it deems necessary. The purchaser will then inform the vendor whether or not such customer is approved and if approved, the credit limit and any other terms and conditions the purchaser considers necessary. Unless and until the foregoing approval has been withdrawn, all credit sale by the vendor to such customer from the date of the purchaser`s approval and within the amount of the credit limit and in compliance with the other terms and conditions (if any) imposed by the purchaser will be an approved credit sale, the purchaser shall be obliged to accept the same when offered, provided always that the offer is made in accordance with clause 2 hereof and the vendor complies with all other terms and conditions of this Agreement.

(2) The purchaser may at any time and without giving any reason therefor, increase or reduce any credit limit or vary the terms and conditions (if any) or impose new or additional terms and conditions or withdraw the credit approval entirely.

Clause 10 of the factoring agreement read as follows:

(1) The purchaser accepts the credit risks in respect of approved credit sales

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