Teo Han Tong v Tecta Pacific (S) Pte Ltd (in members' voluntary liquidation)

JurisdictionSingapore
JudgeKarthigesu JA
Judgment Date28 October 1997
Neutral Citation[1997] SGCA 46
Docket NumberCivil Appeal No 23 of 1997
Date28 October 1997
Year1997
Published date19 September 2003
Plaintiff CounselSim Bock Eng (Wong Partnership)
Citation[1997] SGCA 46
Defendant CounselGan Kam Yuin (Bih Li & Lee)
CourtCourt of Appeal (Singapore)
Subject MatterPleadings,Amendment,Failure to file proof of debt by time stipulated by liquidator,Appeal against grant of leave to amend defence,r 91 Companies (Winding Up) Rules,Civil Procedure,s 283(1) Companies Act (Cap 50, 1994 Ed),Whether amendment disclosed reasonable defence to claim
Judgment:

KARTHIGESU JA

(delivering the grounds of judgment of the court): This was an appeal against the grant of leave to amend the defence. We allowed the appeal at the end of the hearing for the reasons which follow.

2. The facts

The appellant claimed a sum of US$4,925,628.11 and interest thereon as against the respondents in a statement of claim filed on 24 July 1996. The American Express Bank Ltd (the Bank) had established an irrevocable letter of credit on 12 May 1994 in favour of a company called Sigma Inc for the account of the respondents. According to the appellant, he had agreed to indemnify the Bank at the respondents` requests made orally to him by Low Ngee Kiat and Leow Joon Tong both of the respondents. The letter of credit was duly issued by the Bank under which a sum of US$4,737,000 was paid out. As at September 1995, a sum of US$4,925,628.11 was due to the Bank.

3.The respondents made no payment towards the sum due to the Bank under the letter of credit. The Bank thereafter deducted the same sum from the appellant`s account with the Bank under the terms of the indemnity. The appellant in turn demanded payment from the respondents by his solicitors` letter dated 1 April 1996 but the respondents failed to make payment of any part of the amount due.

4.In the respondents` defence filed on 14 August 1996, they denied that the letter of credit facility was for their account or benefit. Rather, the respondents` Low Ngee Kiat and Leow Joon Tong were requested by Teh Soon Seng, the appellant`s son, to apply for the letter of credit facility from the Bank in the respondents` name. The purpose of the facility was to finance a transaction initiated by Teh Soon Seng for his own benefit or that of companies in which he had an interest and involving the company, Sigma Inc. As such, the credit facility granted by the Bank was not for the respondents` benefit. The respondents averred that the Bank had never granted any facility to the respondents for their own use.

5.The respondents further denied that they had requested the appellant to indemnify the Bank. It was the Bank which had requested the indemnity from the appellant since the appellant or his son Teh Soon Seng or both had instructed the Bank to grant a letter of credit facility upon the respondents` application, despite the fact that the respondents had no account with the Bank. The respondents` defence is that they had merely lent their name to the transaction at the request of Teh Soon Seng. As such, they were not liable to any party for the facility given by the Bank to finance the transaction. They further alleged that no demand was ever made by the Bank on the respondents for payment of sums due under the letter of credit facility. The only exception was a demand for the sum of US$1,246,099.51 which, they were later notified by the Bank, had been discharged by the appellant under the letter of credit facility.

6.The respondents are in members` voluntary liquidation. Pursuant to r 91 of the Companies (Winding-Up) Rules, they had placed advertisements on 15 December 1995 to invite all creditors to prove their debts or claims against the respondents by 15 January 1996. The appellant failed to lodge a proof of debt by 15 January 1996 and the respondents sought to amend their defence to include a further or alternative plea that the appellant has no reasonable cause of action against the respondents by reason of such failure.

7.The proposed amendments to the defence were as follows:

12 Further or in the alternative the defendants (ie the respondents) say that by way of advertisements inserted in the edition of the Business Times dated 15 December 1995 and in the edition of the Government Gazette dated 15 December 1995, the liquidators of the defendants gave requisite notice pursuant to the Companies Act and the Companies (Winding Up) Rules to all creditors of the defendants to prove their debts or claims.

13 By the said advertisements all creditors were required to prove their debt or claims by 15 January 1996, which the Plaintiff (ie the appellant) failed to do. Pursuant to r 91 of the Companies (Winding Up) Rules the plaintiff is excluded from the benefit of any distribution and the defendants therefore say that the plaintiff has no or no reasonable cause of action against the defendants.

8. The decision below

The application to amend the defence in this respect was disallowed by the assistant registrar but was allowed, on appeal, by the learned judicial commissioner. The judicial commissioner was of the view that the proposed amendments raised both issues of facts and law by reason of the interpretation of rule 91(1) of the Companies (Winding Up) Rules; the appellant`s reference to the contents of the advertisements relied upon; the implication and...

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