Wong Ser Wan v Ng Bok Eng Holdings Pte Ltd and Another (No 2)

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 06 September 2004
• Neutral Citation: [2004] SGHC 197
• Docket Number: Suit No 310 of 2003 (Summons in
• Date: 06 September 2004
• Published date: 10 September 2004
• Year: 2004
• Plaintiff Counsel: K Shanmugam SC, Ang Cheng Hock, Leona Yuen (Allen and Gledhill)
• Citation: [2004] SGHC 197
• Defendant Counsel: Leslie Chew SC, Chan Kia Pheng, Shaun Koh (Khattar Wong and Partners)
• Court: High Court (Singapore)
• Subject Matter: Section 73B Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed),Land,Conveyance,Whether individual creditor entitled to commence action to annul sale and transfer of assets notwithstanding bankruptcy of debtor who executed alleged fraudulent conveyance,Factors to consider

6 September 2004 Judgment reserved.

Judith Prakash J:

1 This suit was started on 1 April 2003 by the plaintiff, Mdm Wong Ser Wan, for the purpose of annulling the sale and transfer to the defendants of assets formerly owned by her ex-husband, Mr Ng Cheong Ling. It was brought under the provisions of s 73B of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) (“the Act”). The full facts of the case are set out in the judgment that I delivered in [2004] SGHC 181 on 19 August 2004. This judgment deals with an application made by the defendants that came up for hearing on the first day of the trial. After hearing the arguments, I indicated that I would give my decision after the trial had ended.

2 By a Summons for Further Directions filed on 16 April 2004, the defendants applied for the following orders to be made:

(a) pursuant to O 14 r 12 of the Rules of Court (Cap 322, R 5, 2004 Rev Ed), a determination of the issue that, as a matter of law, Mdm Wong is not the correct plaintiff in respect of her claim against the first and second defendants made pursuant to s 73B of the Act and that the correct party to make such a claim as plaintiff is the Official Assignee;

(b) this action, so far as it is made pursuant to s 73B of the Act, or alternatively, the entire action if this court deems fit, be stayed for 14 days pending the Official Assignee being named as the plaintiff in place of Mdm Wong in respect of the claim; and

(c) in default of the above, Mdm Wong’s claim made pursuant to s 73B of the Act be struck out or dismissed without more, and the costs of this claim thrown away be paid by Mdm Wong to the first and second defendants.

3 It is significant that the application was made more than a year after the action had started and after the parties had prepared and exchanged their Affidavits of Evidence-in-Chief, and were almost ready for the trial which had been fixed to take place between 12 May and 18 May 2004. The application first came up for hearing on 28 April 2004 but in view of the imminent start of the trial, the hearing was adjourned to be determined by the trial judge.

Relevant facts

4 The facts relevant to this application are set out in the affidavits filed by the defendants’ solicitor Mr Chan Kia Pheng and by Mdm Wong herself. No challenge has been mounted as to the accuracy of the facts asserted by Mdm Wong.

5 The assets which were the subject matter of the action comprised the land and premises known as 764 Mountbatten Road, Singapore (“the Mountbatten property”) and 60,000 ordinary shares in the capital of Ng Bok Eng Holdings Pte Ltd, the first defendant (“the shares”). Mr Ng was previously the legal owner of both assets. On 27 June 1998, he transferred the Mountbatten property to the first defendant. On 26 September 1998, he transferred the shares to the second defendant, Bian Bee Company Pte Ltd.

6 Mr Ng was made a bankrupt on 11 October 2002. By an Order of Court dated 14 October 2002, one Mr Loke Poh Keun was appointed the trustee in bankruptcy of Mr Ng’s estate. Having asked the creditors to file their proofs of debt, Mr Loke proceeded to convene a creditors’ meeting. The creditors included Aromate Pte Ltd, the petitioning creditor, represented by Mdm Wong. Mdm Wong was also a creditor in her own right. She had filed a proof of debt of $1,402,072.71. Other creditors who had filed proofs of debt and were entitled to attend the meeting included Mr Ng Bok Beng, the bankrupt’s father and a director of the first defendant; the bankrupt’s brother, Mr Ng Cheong Bian, who was a director of the second defendant; the first defendant itself; Ms Ng Chai Loan, the bankrupt’s sister; and three companies from China and Hong Kong that were started and run by the bankrupt.

7 The first creditors’ meeting was held on 19 December 2002. At the meeting, a creditors’ committee of three members was elected. Those elected were Mr Ng Bok Beng, the first defendant and Goodray Limited, a Chinese company in which the bankrupt was, practically, the only shareholder. The first creditors’ committee meeting was held on 23 January 2003. Two days later, there was a pre-trial conference in respect of the on-going dispute between Mdm Wong and the bankrupt over the division of their matrimonial assets. Mr Loke appeared and informed the court that the creditors’ committee was in favour of commencing legal proceedings to recover assets disposed of by the bankrupt in the five years preceding the bankruptcy order and that these assets included the Mountbatten property and the shares. He also stated that the creditors’ committee needed time to seek legal advice for starting such proceedings. As a result, the pre-trial conference was adjourned to 22 February 2003 to allow Mr Loke time to commence legal action.

8 Having held a second creditors’ committee meeting on 4 February 2003, Mr Loke was able to obtain legal advice on the issue from Messrs Rajah & Tann. At the next pre-trial conference, Mr Loke informed the court that he needed time to consider this advice before deciding whether to proceed. He did not, however, disclose what the advice had been. Having heard this, the district judge observed that if the intended proceedings to set aside the transactions relating to the transfer of the assets had not been commenced by the next pre-trial conference, she intended to proceed with the hearing of the ancillary matters. The next pre‑trial conference was then fixed for 5 April 2003.

9 On 3 March 2003, Mr Loke issued a notice for a second creditors’ meeting to be held on 12 March. One item on the agenda was the consideration of whether the trustee in bankruptcy should proceed with court action to set aside the transactions relating to the Mountbatten property and the shares. Two days later, Mr Loke informed Mdm Wong that he had resigned as trustee in bankruptcy and that his resignation was due to take effect on 5 April 2003. When the creditors’ meeting took place as scheduled, the creditors were informed by Mr Loke that he would be referring the matter set out in the agenda to the Official Assignee who would be taking over as the trustee of Mr Ng’s estate.

10 By 1 April 2003, no action had been taken on behalf of Mr Ng’s estate to recover the Mountbatten property and the shares. Mdm Wong considered that the trustee in bankruptcy had had more than sufficient time to file such an action but had not done so. Further, the district judge had decided that if no such action was started by 5 April 2003, she would proceed with the hearing of the ancillary matters. Mdm Wong considered that it was not reasonable to expect the trustee in bankruptcy to take action to recover the assets since the creditors and the creditors’ committee were effectively controlled by the first defendant and Mr Ng Bok Beng. She considered that through the first defendant and Mr Ng Bok Beng, the creditors were simply buying time and wanted to prevent or delay any action relating to the assets. She therefore decided to commence the present suit.

11 The next pre-trial conference proceeded as scheduled on 5 April. The Official Assignee attended the conference. Mdm Wong’s solicitors informed the court of the commencement of this suit. The district judge then vacated the trial dates fixed for hearing of the ancillary matters and indicated that she would have no objection if that matter was transferred to the High Court to be heard together with the present suit. Three days later, the Official Assignee wrote to Mdm Wong’s solicitors asking for details of the action which Mdm Wong had taken. Copies of the Writ and Statement of Claim were subsequently furnished to the Official Assignee. No objections to this action were received from the Official Assignee then or at any time thereafter.

The arguments

12 For the purposes of this application, only sub-s (1) of s 73B of the Act is relevant. This reads:

Except as provided in this section, every conveyance of property, made whether before or after 12th November 1993, with intent to defraud creditors, shall be voidable, at the instance of any person thereby prejudiced. [emphasis added]

This sub-section is the only part of s 73B that indicates who has locus standi to bring an action based on the section. The wording indicates that standing to bring the action is vested in a person who has been prejudiced by the fraudulent transfer. There is nothing in the wording that implies that the situation would be different if the debtor who made the fraudulent transfer had been adjudicated a bankrupt.

13 As the defendants submitted, however, there is authority for the proposition that once a debtor is made bankrupt, any challenge mounted against any disposition of property by such debtor must be taken by the trustee in bankruptcy, whether the basis for the challenge lies in the provisions of the Bankruptcy Act (Cap 20, 2000 Rev Ed) or in other legislation like the Act. They cited the passage at pp 342–343 of The Law and Practice in Bankruptcy by Williams...