Case Summaries

Ho Yu Tat Edward v Chen Kok Siang Joseph and another [2020] SGCA 38

SUPREME COURT OF SINGAPORE

22 April 2020

Case summary

Ho Yu Tat Edward v Chen Kok Siang Joseph and another [2020] SGCA 38
Civil Appeal No 162 of 2019

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Decision of the Court of Appeal (delivered by Tay Yong Kwang JA):

Outcome: Court of Appeal dismisses the appellant’s appeal and holds that he had no legal standing to commence Suit No 965 of 2018 on 1 October 2018 as he did not obtain the Director General of Insolvency’s prior sanction.

Introduction

1 The sole issue in this appeal concerned the following legal question: does a bankrupt in Malaysia have to obtain the sanction of the Director General of Insolvency (“the DGI”), who is the equivalent of Singapore’s Official Assignee (“the OA”), before he commences legal proceedings in Singapore which are based on claims that are vested in the DGI?

2 Section 38(1)(a) of the Insolvency Act 1967 (Act 360 w.e.f 31 December 1988) (M’sia) (“the Malaysian Insolvency Act”) stipulates that a bankrupt in Malaysia shall be incompetent to maintain any action without the “previous sanction” of the DGI, other than an action for damages in respect of an injury to his person. It was not disputed that the plaintiff/appellant obtained the DGI’s sanction only after he commenced the present action, Suit No 965 of 2018 (“Suit 965/2018”).

Brief facts

3 The appellant, Dr Edward Ho Yu Tat, is a Malaysian citizen. The first respondent, Mr Joseph Chen Kok Siang, was the former solicitor of the appellant. The first respondent is the managing partner of the second respondent, Joseph Chen & Co. He acted for the appellant who was the plaintiff in District Court Suit No 2230 of 2011 (“the Underlying Suit”).

4 On 5 December 2013, the appellant’s defamation claim in the Underlying Suit was dismissed by the District Judge (“the DJ”). On 26 September 2014, the appellant’s appeal against the DJ’s decision was dismissed by the High Court.

5 On 10 December 2014, the appellant was made a bankrupt in Malaysia by a bankruptcy order of the Penang High Court. The appellant remained an undischarged bankrupt at the time the appeal before the Court of Appeal (“the Court”) was heard.

6 On 1 October 2018, the appellant commenced Suit 965/2018 against the respondents. The appellant sued the respondents for breach of contract and/or negligence arising out of their legal representation of the appellant in the Underlying Suit.

7 On 15 October 2018, the appellant applied to the DGI for his sanction. The appellant obtained the DGI’s sanction on 14 December 2018.

Decisions of the High Court

8 The respondents took out a striking out application before the Assistant Registrar (“the AR”). The main issue was whether the DGI’s sanction which was granted after the commencement of Suit 965/2018 cured the appellant’s failure to comply with s 38(1)(a) of the Malaysian Insolvency Act. The AR held that the appellant’s failure to obtain the DGI’s prior sanction before commencement of the action could not be cured by the DGI’s sanction granted after commencement of the action. Accordingly, the AR struck out Suit 965/2018 on the ground that it was legally unsustainable as the appellant had no legal standing to commence Suit 965/2018 at the time of commencement. The appellant appealed to the High Court judge (“the Judge”). The Judge affirmed the AR’s decision in her oral judgment delivered on 29 July 2019.

Summary of the parties’ arguments on appeal

9 The appellant raised a new argument before the Court that was not advanced before the AR or the Judge. According to the appellant, the Court’s decision in Standard Chartered Bank v Loh Chong Yong Thomas [2010] 2 SLR 569 (“Thomas Loh”) stood for the proposition that the prior sanction of the OA/DGI is only necessary for claims that do not vest in the OA/DGI.  Since the appellant’s claims in contract and tort against the respondents vested in the DGI, the appellant did not have to seek the prior sanction of the DGI. The issue of whether sanction could be granted retrospectively was thus irrelevant.

10 The appellant claimed that because the striking out application and the appeal therefrom had proceeded on the wrong question (namely, whether the DGI’s sanction had retrospective effect), he was prejudiced in that he was denied the opportunity to cure the relevant defect in his pleadings, this defect being the commencing of Suit 965/2018 in his own name rather than in the DGI’s name. This defect could have been cured by allowing the appellant to amend his pleadings under O 20 r 5(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”).

The Court’s decision

11 Section 38(1)(a) of the Malaysian Insolvency Act governed the appellant’s capacity to sue as a bankrupt in Malaysia, rather than s 131(1)(a) of the Singapore Bankruptcy Act (Cap 20, 2009 Rev Ed) (“the Singapore Bankruptcy Act”) (at [33]).

12 Section 152(1) of the Singapore Bankruptcy Act provides that the Singapore and Malaysian governments shall recognise the respective official assignees in each country. It would be inconsistent with the legislative framework for the Singapore courts to recognise the office of the DGI in Malaysia and yet permit a bankrupt in Malaysia to commence an action in Singapore without the DGI’s sanction, if the bankrupt is required to obtain the DGI’s sanction as a matter of Malaysian law (at [34][35]).

13 The appellant’s new argument was untenable as it clearly contradicted s 38(1)(a) of the Malaysian Insolvency Act. The appellant did not attempt to show how his new argument was supported by the text of this provision or by Malaysian case law. Section 38(1)(a) does not state that a bankrupt in Malaysia is not required to seek the DGI’s prior sanction if his claims are vested in the DGI. Instead, it states in clear terms that so long as the action is not one for “damages in respect of an injury to his person”, a bankrupt is required to obtain the “previous sanction” of the DGI before he commences “any action” (at [37]).

14 The appellant’s new argument was also unsustainable in the light of the decision of the Federal Court of Malaysia in Akira Sales & Services (M) Sdn Bhd v Nadiah Zee bt Abdullah and another appeal [2018] 2 MLJ 537 (“Akira Sales”) which held that s 38(1)(a) of the Malaysian Insolvency Act is applicable to claims which are vested in the DGI (at [38][39]).

15 The appellant’s failure to obtain the DGI’s previous sanction affected his competence or capacity to commence his action in Singapore. If he was “incompetent to maintain” the action, he could not be competent to commence the action too and this is consistent with Akira Sales. This incompetence or lack of capacity was not a mere procedural irregularity which could be rectified by amendment under O 20 r 5(1) of the Rules of Court because the action could not be commenced by the appellant at all on 1 October 2018 (at [40]).

16 Thomas Loh, which concerned s 131(1)(a) of the Singapore Bankruptcy Act, was not directly relevant to the question of whether the appellant had to comply with s 38(1)(a) of the Malaysian Insolvency Act. In any event, the appellant’s new argument resulted from an incorrect reading of Thomas Loh. The position in Thomas Loh is consistent with the plain wording of s 131(1)(a) of the Singapore Bankruptcy Act, under which a bankrupt in Singapore is required to obtain the sanction of the OA before he commences “any action”, unless the action is “an action for damages in respect of any injury to the bankrupt’s person” or “a matrimonial proceeding”. This would include claims which vest in the OA and claims that do not vest in the OA (at [42] and [46]).

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.

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