Tan Teck Guan v Mapletree Trustee Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 26 April 2011
• Neutral Citation: [2011] SGHC 99
• Year: 2011
• Date: 26 April 2011
• Published date: 27 April 2011
• Hearing Date: 28 March 2011
• Plaintiff Counsel: Vijai Parwani (Parwani & Co)
• Citation: [2011] SGHC 99
• Defendant Counsel: Wu Xiaowen (Lexton Law Corporation)
• Court: High Court (Singapore)
• Docket Number: Bankruptcy No 1318 of 2010 (Registrar's Appeal No 72 of 2011)

Chan Seng Onn J:

This is an appeal against the bankruptcy order made by an Assistant Registrar (“AR”) on 27 January 2011 in Bankruptcy No 1318 of 2010 (“the Bankruptcy Order”).

Factual background

Mapletree Trustee Pte Ltd (“the respondent”) obtained judgment against Tan Teck Guan (“the appellant”) on 9 December 2009. The appellant made part-payment of the judgment sum, but due to cash flow problems, could not make payment of the balance sum. The respondent therefore commenced bankruptcy proceedings by issuing and serving a Statutory Demand on the appellant on 17 April 2010.

The respondent filed an application for bankruptcy on 5 August 2010 (“bankruptcy application”). In the affidavit filed by one Tam Mei Fong on behalf of the respondent in support of the application (“the Creditor’s Affidavit”), it was asserted that the appellant was not eligible to be considered for the Debt Repayment Scheme (“DRS”) as he had two previous bankruptcy orders made against him in the 5 years preceding the date of the respondent’s bankruptcy application. First, pursuant to Bankruptcy No 2614 of 2007 by the petitioning creditor Oversea-Chinese Banking Corporation Limited (“OCBC”), the appellant was adjudged bankrupt and a bankruptcy order was made against the appellant on 23 April 2009, with a stay granted till 11 May 2009. The appellant made payment to OCBC on 12 May 2009. Although this was one day after the stay had expired, OCBC was itself under the impression that the due date of payment was 12 May 2009, and in fact wrote to the court stating that payment was made within the stay period. Accordingly, OCBC’s solicitors filed Summons 3050 of 2009 for the bankruptcy order of 23 April 2009 to be annulled. Second, pursuant to Bankruptcy No 2401 of 2007 by the petitioning creditor Singa Triumph, the appellant was adjudged a bankrupt and a bankruptcy order was made against the appellant on 29 November 2007, with a stay granted till 13 December 2007. Following the appellant’s payment by the abovementioned date of the stay, Singa Triumph filed Summons 5680 of 2007 on 27 December 2007 for the bankruptcy order of 29 November 2007 to be annulled.

In reliance on the Creditor’s Affidavit, the AR did not refer the matter to the Official Assignee for assessment of the appellant’s suitability for DRS (“DRS suitability assessment”). Instead, the appellant was adjudged a bankrupt pursuant to the Bankruptcy Order of 27 January 2011.

It is undisputed that the two bankruptcy orders abovementioned had been made against the appellant. However, the appellant emphasised that both orders had already been annulled because full payment had been made in both cases. Although the annulments were disclosed to the court in the bankruptcy application, the effect of the annulled bankruptcy orders on the appellant’s eligibility for the DRS had not been canvassed before the AR, possibly because the appellant was not represented by legal counsel at the hearings on 2 September 2010 and 27 January 2011.

The appellant therefore filed an application via Summons 776 of 2011, arguing that the Bankruptcy Order should not have been made, and that instead, the appellant should have been referred to the Official Assignee for DRS suitability assessment. The court hearing Summons 776 of 2011 took the view that the appellant’s application should be by way of an appeal against the AR’s decision not to refer the appellant for DRS. The appellant accordingly filed the present appeal.

Issue before the court

The sole issue before this court is: whether the existence of a bankruptcy order, which was made and subsequently annulled within the period of 5 years immediately preceding the date of the bankruptcy application, per se disqualifies the debtor from being referred to the Official Assignee for DRS suitability assessment. In addressing this issue, this court must decide on whether the annulment of a bankruptcy order operates retrospectively or prospectively in the specific situation where the debtor’s eligibility for the DRS is being considered.

The law The effect of annulment of a bankruptcy order

The effect of annulment of a bankruptcy order is not provided for in our legislation. There is also no Singapore case law authority on this point. Accordingly, I turn to consider Commonwealth jurisprudence on the effect of such annulment. In so doing, I emphasise that Commonwealth jurisprudence is persuasive given the similarities in the provisions relating to annulment of bankruptcy orders. A comparison of Singapore’s Bankruptcy Act (Cap 20, 2009 Rev Ed) (“Bankruptcy Act”) with the bankruptcy legislation in Malaysia, Hong Kong and Australia suffices to illustrate this point. Section 123(3) of the Bankruptcy Act provides:

Where a court annuls a bankruptcy order under this section, any sale or other disposition of property, payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or, in default of any such appointment, revert to the bankrupt on such terms as the court may direct.

Section 105(2) of the Malaysia Bankruptcy Act 1967 provides:

Where an adjudication is annulled under this section, all sales and dispositions of property, and payments duly made, and all acts theretofor done by the Director General of Insolvency, or other person acting under his authority, or by the court, shall be valid, but the property of the debtor who was adjudged bankrupt shall vest in such person as the court appoints, or in default of any such appointment revert to the debtor for all his estate or interest therein on such terms and subject to such conditions, if any, as the court declares by order.

Section 33(4) of the Hong Kong Bankruptcy Ordinance provides:

Where the court annuls a bankruptcy order under this section or section 20I, any sale or other disposition of property, payment made or other thing duly done by or under the authority of the Official Receiver, a nominee or a trustee or by the court is valid, but if any of the bankrupt's estate is then vested in such a trustee, it shall vest in such person as the court may appoint or, in default of any such appointment, revert to the bankrupt on such terms (if any) as the court may direct, and the court may include in its order such supplemental provisions as may be authorized by the rules.

Section 74(6) of the Australian Bankruptcy Act 1966 provides:

Where a bankruptcy is annulled under this section, all sales and dispositions of property and payments duly made, and all acts done, by the trustee or any person acting under the authority of the trustee or the Court before the annulment shall be deemed to have been validly made or done but, subject to subsection (7), the property of the bankrupt still vested in the trustee vests in such person as the Court appoints or, in default of such an appointment, reverts to the bankrupt for all his or her estate or interest in it, on such terms and subject to such conditions (if any) as the Court orders.

There is evidently substantial similarity in the bankruptcy legislation of Singapore, Malaysia, Hong Kong and Australia. This is unsurprising, given that the legislative provisions in these jurisdictions were based on the bankruptcy legislation in England.

The weight of Commonwealth case law authority indicates that, as a general proposition, the effect of an annulment of a bankruptcy order is retrospective. In the old English case of Re Keet ex p Official Receiver [1905] 2 KB 666 at 676 (“Re Keet”), the court noted, albeit in obiter, that the effect of an annulment was to “wipe out the bankruptcy altogether, and put the bankrupt in the same position as if there had been no adjudication”.

This position was also taken by the Queensland Court of Appeal in the Australian case of Theissbacher v MacGregor Garrick and Co [1993] 2 Qd R 223 (“Theissbacher”), where the majority (Pincus JA and White J) held that a former bankrupt would, upon annulment, be treated in general as never having been made a bankrupt. The same position was reiterated in the cases...