LKM Investment v Cathay Theatres: Restraining Winding Up Petition Based on Statutory Demand Validity & Abuse of Process

LKM Investment Holdings Pte Ltd sought an order from the High Court of Singapore to restrain Cathay Theatres Pte Ltd from presenting a winding up petition against them, pending the disposal of an appeal. The court, presided over by Justice Judith Prakash, considered the validity of the statutory demand served by Cathay Theatres and whether presenting a winding up petition based on a judgment under appeal constituted an abuse of process. The court allowed LKM's application, restraining Cathay from presenting a winding up petition based on the statutory demand.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application allowed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

LKM Investment sought to restrain Cathay Theatres from presenting a winding up petition. The court addressed the validity of the statutory demand and abuse of process.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
LKM Investment Holdings Pte LtdPlaintiffCorporationApplication AllowedWon
Cathay Theatres Pte LtdDefendantCorporationApplication DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Christopher DanielAllen & Gledhill
Michael Hwang SCAllen & Gledhill
Christine M ChanAllen & Gledhill
Chew Kei-JinTan Rajah & Cheah

4. Facts

  1. Cathay sued LKM for specific performance of an option agreement.
  2. LKM disputed liability and counterclaimed for rescission.
  3. The Judicial Commissioner gave judgment in favor of Cathay.
  4. LKM appealed against the judgment.
  5. Cathay served a statutory demand on LKM for late completion interest.
  6. LKM applied for a stay of execution of the judgment.
  7. LKM sought to restrain Cathay from presenting a winding up petition.

5. Formal Citations

  1. LKM Investment Holdings Pte Ltd v Cathay Theatres Pte Ltd, OS 1421/1999, [2000] SGHC 13

6. Timeline

DateEvent
Cathay granted an option agreement to LKM.
LKM exercised the option agreement.
Cathay issued a notice to complete.
Cathay started Suit 1944 of 1997 against LKM.
Judicial Commissioner Lee Seiu Kin gave judgment in favour of Cathay.
LKM appealed against the judgment.
Cathay served a statutory demand on LKM.
LKM applied for a stay of execution of the judgment.
LKM filed an originating summons against Cathay to restrain the presentation of a winding up petition.
The court heard LKM's interim application and granted orders restraining Cathay from presenting a winding up petition.
Decision Date

7. Legal Issues

  1. Validity of Statutory Demand
    • Outcome: The court held that the statutory demand was invalid as it was made in respect of a debt which had not accrued as of that date.
    • Category: Substantive
    • Sub-Issues:
      • Debt due and accruing
      • Proper construction of judgment order
  2. Abuse of Process
    • Outcome: The court held that a judgment creditor presenting a winding up petition against the judgment debtor is not an abuse of process simply because the judgment was under appeal.
    • Category: Procedural
    • Sub-Issues:
      • Presentation of winding up petition based on judgment under appeal
      • Judgment debt as undisputed debt

8. Remedies Sought

  1. Restraint of Winding Up Petition

9. Cause of Actions

  • Specific Performance
  • Rescission of Contract

10. Practice Areas

  • Commercial Litigation
  • Insolvency Litigation

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Loh Wai Lian v SEA Housing Corporation Sdn BhdPrivy CouncilYes[1987] 2 MLJ 1MalaysiaCited for the principle that a single aggregate sum, which could not be calculated and did not become due until the building was completed and ready to be handed over, was applicable in this case.
Insun Development Sdn Bhd v Azali bin BakerFederal CourtNo[1996] 2 MLJ 188MalaysiaCited to contrast with Loh Wai Lian, indicating different interpretations resulting from differences in the form of words used to specify the way in which the obligation to pay a sum of money arises.
Solid Kitchen Sdn Bhd v Regal Development Sdn BhdN/ANo[1998] 6 MLJ 437MalaysiaCited for the proposition that a judgment debt which is the subject of a further appeal to a superior court could not be said to be an undisputed debt.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50)Singapore
s 254(2)(a) of the Companies Act (Cap 50)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Statutory Demand
  • Winding Up Petition
  • Late Completion Interest
  • Abuse of Process
  • Judgment Debt
  • Bona Fide Dispute
  • Stay of Execution

15.2 Keywords

  • winding up
  • statutory demand
  • insolvency
  • companies act
  • abuse of process

17. Areas of Law

Area NameRelevance Score
Insolvency Law90
Winding Up90
Contract Law40
Jurisdiction20

16. Subjects

  • Insolvency Law
  • Civil Procedure