Re Siah Ooi Choe

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 14 November 1997
• Neutral Citation: [1997] SGHC 299
• Docket Number: Bankruptcy No 506 of 1986
• Date: 14 November 1997
• Year: 1997
• Published date: 19 September 2003
• Plaintiff Counsel: Vinodh Coomaraswamy and Alan Koh (Shook Lin & Bok)
• Citation: [1997] SGHC 299
• Defendant Counsel: Sally Ang,Woo Tchi Chu (Robert WH Wang & Woo)
• Court: High Court (Singapore)
• Subject Matter: Insolvency Law,Bankruptcy,Discharge,s 124(3), (4) & (5) Bankruptcy Act (Cap 20, 1996 Ed),Whether previous conviction relevant consideration),Relevant considerations,Proper approach to application -Consideration of object and purpose of new provisions of Bankruptcy Act (Cap 20, 1996 Ed),Striking of balance between two major conflicting concerns,ss 124(3), (4) & (5), 124(5)(h), (j) Bankruptcy Act (Cap 20, 1996 Ed),Whether bankrupt's blameworthiness in loss of company assets relevant consideration under s 124(5)(j),Court not to consider requirements or factors going against dominant object and purpose of Bankruptcy Act (Cap 20, 1996 Ed),Distinction between cases with and without special facts,Factors to be considered as set out in statutory provisions,Whether existence of special facts,Application

Judgment:

WARREN LH KHOO J

During the economic depression of 1985-1986 in Singapore, many companies went under, many businessmen became bankrupt, often through no fault of their own. Foreclosures by banks, on top of poor business, worked to send companies and their owners down the road to insolvency. As much as it was tragic for the individual companies and their owners, this state of affairs came to be seen as wasteful of the entrepreneurial resources of the nation. It led to a rethinking of our corporate and personal insolvency laws.

2.Under amendments to the Companies Act, introduced in 1987, companies suffering from temporary liquidity problems but which otherwise had good prospects of being saved from insolvency, are given such a chance by being placed under judicial management. In the case of individuals, the legislative process took longer, but it came to fruition in 1995 in the form of a wholesale revision of the Bankruptcy Act. It does not prevent people from being made bankrupts but it makes it greatly easier than before for bankrupts to be discharged. Subject to the provisions of the Act, the court has power to make orders discharging persons from bankruptcy, with or without conditions. In the case of those with a total indebtedness not exceeding $100,000 (now raised to $250,000) the Official Assignee is also given power to issue a certificate of discharge, subject to recourse to the court in case of objection by any creditor.

3.The present application was one made direct to the court, as the total indebtedness proved in bankruptcy far exceeded the Official Assignee`s jurisdiction. In fact it is one of the largest bankruptcies which the Official Assignee`s office has had to deal with. The facts are as follows. Before he was made a bankrupt, the applicant, Mr Siah Ooi Choe, was the head of a group of companies. The flagship company, Lamipak Industries Pte Ltd, was prominent in the business of manufacturing multi-layed plastic film. I am told that in its hey-day, the group had assets of over $150m and kept about 1,000 people employed, here and abroad. I am told that he had factories in the Philippines, China, Thailand, Ireland and the United States. He was an entrepreneur par excellence. He was a self-made man. With only an `O` level education and starting with very little money, he built up his business to what it was. He was also quite resourceful technically, developing new products and machinery to make them.

4.Unfortunately, Mr Siah`s companies and he himself were caught by the depression I was referring to. The long string of banks and financial institutions which had lent his companies huge amounts of money, some unsecured, began to call in their loans. He had signed personal guarantees for these loans, so he was also in jeopardy. Almost over-night, his business empire collapsed, and he was made a bankrupt. His wife became a bankrupt with him. He failed in a big way, just as he had succeeded magnificently.

5.The receiving and adjudication orders against Mr Siah were made on 12 September 1986. In the statement of affairs filed on 19 February 1987, his total liabilities were shown as more than $140m. Some thirty institutional creditors lodged proofs of debts totalling more than $125m. All the properties belonging to the companies which had been used to secure the loans were sold off by the banks. Mr Siah`s personal estate was reduced to nothing except the balance in his CPF account, which by law was beyond the reach of creditors. With the Official Assignee`s consent, he was able to make use of his and his wife`s CPF balances to buy a small flat, where his family with four growing children have been living since.

6.Mr Siah has been working as a business consultant since January 1992, earning a salary of $3,200 a month. He has been making monthly payments to his bankrupt estate account since 1989. Up to April 1997, the total paid in was about $36,000. It is a drop in the ocean of his enormous debts, but it represents a substantial effort on his part. No dividend has been declared.

7.The application for discharge, made in April, was served on the institutional creditors. Of these, nine (representing, by a rough reckoning, about half of the total indebtedness) objected to the application; the others have not come forward to object.

8.Senior Assistant Registrar Christopher Tang allowed the application subject to the sale of the flat just mentioned and the payment of the net proceeds of the sale to the bankruptcy estate account. The nine institutions appealed. On 29 July, I dismissed the appeal and made only a slight variation of the terms of the discharge. I now give my reasons. I first deal with the law.

9. Scheme of the discharge provisions

A proper approach to an application to discharge from bankruptcy involves a consideration of the object and purpose of these new provisions of the Bankruptcy Act (Cap 20, 1996 Ed) (the Act). The Act was designed to meet two major conflicting concerns. One stemmed from the recognition that many an individual businessman becomes insolvent not through any fault, moral or otherwise, but through just being caught at the wrong turning of the economic cycle. It would be in the interest of society that people who had become bankrupt in such circumstances, and generally, should be given a second chance in life, so that the social cost of waste of entrepreneurial resources could be reduced. The other concern was that, without proper safeguards, people who had used dishonest or fraudulent methods in conducting their business affairs to the detriment of their creditors might get an undeserved advantage from their own wrongdoings. The fear of people taking advantage of their own frauds is probably as old as the institution of bankruptcy itself, and it was natural that such fears were highlighted when an easier regime for discharge from bankruptcy was being proposed. The new legislation sought to strike a balance between these two major concerns. The bill was introduced in Parliament in August 1994. It was referred to a select committee. Representations from individuals and from the financial community were heard. It was then enacted, with some amendments.

10. The relevant provisions

I have already referred to the provisions enabling bankrupts to be discharged by the Official Assignee where the total proved debt does not exceed a prescribed amount. I want now to refer in greater detail to the provisions regulating discharges by the court. The relevant provisions are contained in s 124. Subsection (1) of that section provides that the Official Assignee, the bankrupt or any person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for a discharge.

11.Subsection (3) provides that, subject to sub-s (4), the court may:

(a) refuse the application; or

(b) order an absolute discharge; or

(c) make an order of discharge subject to such conditions as it thinks fit to impose, including conditions with respect to:

(i) any income which may be subsequently due to the applicant;

or

(ii) any property devolving upon him, or acquired by him, after his discharge.

12.Subsection (4) provides that where the bankrupt has committed an offence under the Act or under ss 421, 422, 423 or 424 of the Penal Code or upon proof of any of the facts mentioned in sub-s (5), the court shall :

(a) refuse to discharge the bankrupt from bankruptcy;

(b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25% or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him, or acquired by him, after his discharge, as may be specified in the order and to such other conditions as...