Zhang Hong En Jonathan v Private Trustee in Bankruptcy of Zhang Hong'En Jonathan
Judge | Aedit Abdullah J |
Judgment Date | 02 December 2020 |
Neutral Citation | [2020] SGHC 262 |
Citation | [2020] SGHC 262 |
Defendant Counsel | Koh Yeong Hung Sasha (Adsan Law LLC) |
Hearing Date | 17 September 2020 |
Plaintiff Counsel | Lee Ee Yang, Eoon Zizhen, Benedict (Wen Zizhen) and Chin Yen Bing, Arthur (Covenant Chambers LLC) |
Docket Number | Originating Summons No 779 of 2020 |
Published date | 06 December 2020 |
Court | High Court (Singapore) |
Subject Matter | Trustee in bankruptcy,Jurisdiction,Insolvency Law,Bankruptcy |
Zhang Hong En Jonathan (the “Applicant”), a bankrupt, sought the approval of the respondent, his private trustee in bankruptcy (the “Private Trustee”) to defend a third-party action filed against him. The Private Trustee initially granted his sanction, on certain conditions being met, but later rescinded that sanction, requiring further conditions to be complied with. The Applicant then filed the present application, essentially to obtain sanction to defend the third-party proceedings.
BackgroundPursuant to a Bankruptcy Order (HC/B 1945/2018) (the “Bankruptcy Order”) made on 1 November 2018, the Applicant was made bankrupt, with monthly contributions and target contributions fixed at S$100 and S$5,200 respectively. Since the making of the Bankruptcy Order, the Applicant had attempted without success to seek gainful employment. This lack of success was primarily because of various medical and physical conditions which the Applicant suffered from. Bearing the Applicant’s ability to obtain gainful employment in mind, the monthly contributions and target contributions were determined at a lower level.
The third-party proceedings which the Applicant is seeking sanction to defend arise out of a suit by various persons against a company (the “Company”) and a number of other defendants who are said to be those in control of that company, for fraud and conspiracy (the “suit”). Third-party proceedings were commenced by some of the defendants in that suit against,
When the third-party notice was served on the Applicant, sanction was sought from the Private Trustee by the Applicant for him to defend the third-party proceedings. The Applicant contended that it was important that he defend those proceedings as findings in the suit could lead to criminal liability on his part. Following an exchange of correspondence about the appropriate conditions, the Private Trustee granted sanction by way of letter on 5 May 2020. However, this was revoked in June 2020, with additional conditions imposed before sanction would be granted. The Applicant argues that these additional conditions are unduly onerous and sought the reasons for their imposition from the Private Trustee. The Private Trustee refused to provide reasons. A request for the Private Trustee to reverse his decision was also turned down.
The Applicant’s SubmissionsThe Applicant’s summons sought (a) the reversal of the Private Trustee’s decision to revoke sanction for the Applicant to defend the third-party proceedings against him in the suit, and (b) that the Private Trustee be directed to sanction the defence of those proceedings on the basis of the conditions set out in the Private Trustee’s letter of 5 May 2020 when the original grant of sanction was made.
In his written arguments, the Applicant argued that s 43 of the Insolvency, Restructuring and Dissolution Act (No 40 of 2018) (“IRDA”) imported a judicial review standard, namely irrationality or
Moreover, unlike the situation in
In oral arguments, the Applicant also referred to a number of cases from England and Australia, arguing that they applied a test similar to
The Private Trustee’s primary argument was that there is an absolute bar under s 131(1)(
The Private Trustee also explained that his decision to initially grant the sanction, and then to later revoke it, was justified by the circumstances. In particular, the Private Trustee indicated that he had initially granted sanction on 5 May 2020 because,
Further, the Private Trustee asserts that s 131 of the Bankruptcy Act does not require him to give reasons for his determination of sanction.
I am satisfied that the approach to be taken is one of deference to the decision of the Private Trustee, unless the decision is so perverse that no reasonable trustee faced with the same facts would have come to the same conclusion. In calibrating what a reasonable trustee would do, one should bear in mind the need to protect the interests of the creditors and the estate, without unduly prejudicing the bankrupt. If all things are equal or if there is a realistic risk of both the interests of the creditors and of the bankrupt being prejudiced, one should prefer the interests of the creditors to those of the bankrupt.
Analysis The Statutory Provision The starting point in determining the appropriate approach to reviewing the discretion of private trustees is the words of the legislation. In
… [I]n seeking to draw out the legislative purpose behind a provision, primacy should be accorded to the text of the provision and its statutory context over any extraneous material. The law enacted by Parliament is the text which Parliament has chosen in order to embody and to give effect to its purposes and objects. In line with this, the meaning and purpose of a provision should, as far as possible, be derived from the statute first, based on the provision(s) in question read in the context of the statute as a whole. This approach also coheres with the language of s 9A(1) [of the Interpretation Act], which suggests the
possibility of the purpose or object of a statute being “expressly stated in the written law”.[Emphasis original]
Turning first to the IRDA, s 43 reads:
Review by Court of trustee in bankruptcy’s act, omission or decision
Sub-section (2) is of broad application, but is not material here.
Section 40 of the relevant predecessor legislation, the Bankruptcy Act, is largely worded in the same terms as s 43 of the IRDA, and reads:
Review by court of trustee’s act, omission or decision
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