Standard Chartered Bank v Loh Chong Yong Thomas

• Court: Court of Appeal (Singapore)
• Judge: Chan Sek Keong CJ
• Judgment Date: 29 January 2010
• Neutral Citation: [2010] SGCA 2
• Citation: [2010] SGCA 2
• Defendant Counsel: Chan Wang Ho (Insolvency & Public Trustee's Office),Andre Arul (Arul Chew & Partners)
• Published date: 03 February 2010
• Plaintiff Counsel: Patrick Ang, Chin Wei Lin, Jonathan Lee (Rajah & Tann LLP)
• Hearing Date: 22 October 2009
• Docket Number: Civil Appeal No 47 of 2009
• Date: 29 January 2010
• Subject Matter: Choses in Action,Bankruptcy effects,Civil Procedure,Assignment,Striking out,Bankrupt's duties and liabilities,Insolvency Law,Bankruptcy

V K Rajah JA (delivering the judgment of the court): Introduction

This is an appeal arising from an unsuccessful striking-out application made by the appellant in the District Court. On appeal, the High Court judge (“the Judge”) affirmed the District Court’s decision. The appellant then appealed to this court against the Judge’s decision.

The facts

The appellant is a commercial bank. The respondent, a practising lawyer at the material time, maintained several bank accounts with the appellant. Some of these accounts were in his own name, and the others were office and client accounts of the law firm in which he practised, namely, M/s Y K Lim & Company (“the firm”). It appears that the appellant’s former partner, Lim Yee Kai (“Lim”), embezzled a total of $413,000 from the firm’s client account between June and September 1997. Unfortunately, after Lim absconded, the respondent was left to solely shoulder the liabilities of the firm.

The appellant commenced an action against the respondent in 1997 to recover an outstanding debt due to it. The respondent counterclaimed for damages on the grounds that the appellant had been negligent in allowing withdrawals from the firm’s client account by Lim. This action was subsequently discontinued pursuant to a letter of settlement dated 18 November 1998. The terms of this settlement remain confidential.

Soon after Lim’s embezzlement came to light, the Law Society of Singapore (“the Law Society”) commenced proceedings pursuant to s 27A of the Legal Profession Act (Cap 161, 1994 Rev Ed) against Lim and the respondent in Originating Summons No 1358 of 1997 (“the Law Society Action”) to intervene in their practice as solicitors. Against Lim, the Law Society sought an order to suspend his practising certificate. It further sought a sanction against the respondent in the form of the imposition of a condition on his practising certificate, viz, that he should be prevented from practising as a sole proprietor or partner in a law firm. The High Court judge who heard the Law Society Action, Lee Seiu Kin JC, suspended Lim’s practising certificate on the grounds that Lim had failed to comply with the Legal Profession (Solicitors’ Accounts) Rules (Cap 161, R 8, 1990 Rev Ed). As far as the respondent was concerned, Lee JC found that he had adopted “a rather cavalier attitude towards the accounts of the firm” (see Law Society of Singapore v Lim Yee Kai [1998] 2 SLR(R) 895 at [20]) right from the outset in 1996 when he first joined the firm until 1997 when the embezzlement took place. Accordingly, the court imposed the condition sought by the Law Society. The respondent remained a practising lawyer until he was made a bankrupt on 4 July 2003 upon the application of Aston Properties Pte Ltd, to which the firm owed $85,300 in stakeholding monies.

On 3 May 2004, almost a year after he was made a bankrupt, the respondent commenced District Court Suit No 2018 of 2004 (“the DC Suit”) in his own name against the appellant. In the DC Suit, the respondent alleged that the appellant had committed a breach of duty both in contract and in tort in negligently failing to discharge the requisite duty of care in relation to two bank accounts maintained by him in his own name (“the Bank Accounts”). He claimed that the appellant had without authority, on some six occasions between April 1998 and May 1999, debited from and credited to the Bank Accounts certain sums of money.¹ These unauthorised transactions were for sums ranging from $12.53 to $168.52. As a consequence, the respondent alleged, the appellant had no legal basis to wrongfully dishonour three cheques issued by him for payment to various parties. The first cheque, which was dishonoured on 18 May 1998, was for the sum of $100 made in payment to one Goh Meow Heng, a client of the respondent. The second cheque, which was dishonoured on 27 May 1998, was for the sum of $259 made in payment to Hitachi Credit Singapore Pte Ltd (“Hitachi Credit”) for monthly instalments on a computer leasing arrangement between the respondent and Hitachi Credit. The third cheque, which was dishonoured on 29 May 1998, was for the sum of $354.60 made in payment to the Law Society for a bill in respect of the Law Society Action. As a result of the appellant’s alleged breach of duty in contract and in tort, the respondent claimed, he had suffered a grievous loss of “goodwill and reputation”.²

Subsequently, the respondent made two further amendments to his statement of claim, first on 24 March 2005 and for a second time, more than one and a half years later, on 27 December 2006. The amendment on 24 March 2005 included further details to buttress the respondent’s claim in contract while the amendment on 27 December 2006 was to add an altogether new cause of action in defamation. In respect of this new cause of action, the respondent alleged that, in failing to honour the cheques issued by him and by stating on the returned cheques “Refer to Drawer”,³ the appellant had defamed him. In his statement of claim, the respondent asked for general and exemplary damages to be assessed. For completeness, we should add that, in an affidavit filed on 24 June 2008, the respondent alluded to his claim as amounting to a rather remarkable amount in the region of over a million dollars.⁴

It is common ground that no prior sanction from the Official Assignee (“the OA”) was obtained by the respondent to commence the DC Suit on 3 May 2004 in his own name; neither were the choses in action which were the subject matter of the DC Suit (“the Choses in Action”) assigned by the OA to the respondent. The OA’s sanction for the respondent to proceed with the DC Suit was finally obtained on 7 October 2004, some six months after the writ of summons was first filed on 3 May 2004. The writ, however, was only served on the appellant on 4 November 2004. Although the OA’s sanction to commence the DC Suit was retrospectively obtained, the OA was not asked to nor did he expressly assign the Choses in Action to the respondent. We should also point out that, even after sanction had been given by the OA, the named plaintiff in the DC Suit continued to be the respondent alone. The fact that the respondent had been made a bankrupt and that his property continues to be vested in the OA cannot be gleaned from the statement of claim for the DC Suit. This has given rise to a number of legal controversies which we shall address fully below at [12]–[43].

On ascertaining that the Choses in Action had not been assigned to the respondent, the appellant filed an application to strike out the DC Suit on the basis that (inter alia) the respondent lacked locus standi to bring the action since the Choses in Action had vested in the OA. The striking-out application was first heard by a deputy registrar of the Subordinate Courts (“the Deputy Registrar”), who made no order on it. On appeal to a district judge (“the DJ”), the appellant’s appeal against the Deputy Registrar’s decision was dismissed on 29 March 2007. The DJ’s written grounds are to be found in Loh Chong Yong Thomas v Standard Chartered Bank [2007] SGDC 82. In essence, the DJ held that there was no need for an assignment of the Choses in Action by the OA to the respondent because the requirement for a bankrupt to obtain sanction from the OA under s 131(1)(a) of the Bankruptcy Act (Cap 20, 2000 Rev Ed) (“the BA”) implied that, once the respondent had obtained the requisite sanction, he would be competent to maintain the DC Suit in his own name.

The appellant appealed to the High Court against the DJ’s decision. Before the Judge, the appellant repeated its argument that the respondent had no locus standi to bring the DC Suit in his own name because the Choses in Action were no longer vested in him. It was also contended that, as the respondent was a bankrupt, prior sanction had to be obtained from the OA pursuant to s 131(1)(a) of the BA. The respondent’s failure to do so made the DC Suit a nullity ab initio, and that nullity could not be cured by the retrospective sanction of the OA. The Judge dismissed the appeal. As no written grounds have been given, we shall assume that he agreed with the reasoning of the DJ.

As the Judge did not grant the appellant leave to appeal, the present appeal came before us only after the appellant obtained leave from us to appeal pursuant to s 34(2)(d) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) on 30 March 2009.

The present appeal

The present appeal raised four broad issues as follows: First, were the Choses in Action “property” that became vested in the OA upon the bankruptcy of the respondent by virtue of s 76(1)(a)(i) of the BA (“the first issue”)? Second, if the answer to the first issue was “yes”, was it necessary for the Choses in Action to be assigned by the OA to the respondent before he could commence the DC Suit in his own name (“the second issue”)? Third, regardless of what the answer to the second issue was, was it necessary for the respondent to obtain the prior sanction of the OA under s 131(1)(a) of the BA before he could commence the DC Suit (“the third issue”)? Fourth, in any event, was the respondent’s claim for defamation “an action for damages in respect of an injury to his person” [emphasis added] for the purposes of s 131(1)(a) of the BA (“the fourth issue”)? Before we proceed to consider these issues, we should point out that it is important to bear in mind that our bankruptcy legislation, when it was first enacted, was largely modelled on England’s 19th century bankruptcy legislation.

The first issue

The first issue turns on the meaning of “property” in the BA. Section 2(1) of this Act defines the “property” of a bankrupt to include all “things in action … whether present or future or vested or contingent, arising out of or incidental to … property”, which would include all choses in action relating to property. This definition is in...