Lee Kiang Leng Stanley v Lee Han Chew: Stay of Bankruptcy Proceedings and Unfair Preference
In Lee Kiang Leng Stanley v Lee Han Chew, the High Court of Singapore heard an appeal by Lee Kiang Leng Stanley against an assistant registrar's decision to stay bankruptcy proceedings on the condition that he provide security for the full debt and costs related to Originating Summons No 251 of 2004. The court, presided over by Justice Woo Bih Li, varied the order, reducing the security for costs but maintaining the security for the full debt. The court addressed arguments regarding unfair preference and the applicability of Sections 64(1) and 65(5) of the Bankruptcy Act, ultimately ruling under Section 64(1).
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal allowed in part and dismissed in part.
1.3 Case Type
Bankruptcy
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal regarding stay of bankruptcy proceedings conditioned on security. The court addressed unfair preference claims and varied the security amount.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Lee Kiang Leng Stanley | Debtor, Appellant | Individual | Appeal allowed in part and dismissed in part | Partial | |
| Lee Han Chew (trading as Joe Li Electrical Supplies) | Petitioner, Respondent | Individual | Appeal allowed in part and dismissed in part | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Michael Por | Tan Lee and Partners |
| Tan Bar Tien | B T Tan and Co |
4. Facts
- The petitioner commenced proceedings against R & N Engineering Construction Pte Ltd and the debtor as guarantor.
- A settlement was reached, but a default occurred on the first payment.
- The petitioner commenced winding up proceedings against the company and bankruptcy proceedings against the debtor.
- The debtor filed an application seeking a stay of the bankruptcy petition.
- The assistant registrar ordered a stay on the condition that the debtor provide security for the debt and costs.
- The debtor appealed against the part of the order requiring him to furnish security.
5. Formal Citations
- Lee Kiang Leng Stanley v Lee Han Chew (trading as Joe Li Electrical Supplies), Bankruptcy 1155/2004, RA 164/2004, [2004] SGHC 151
6. Timeline
| Date | Event |
|---|---|
| Debtor filed an application and an affidavit seeking a stay of the bankruptcy petition. | |
| Order made to wind up the Company. | |
| Assistant registrar made orders regarding the stay of the Petition and security to be furnished. | |
| Appeal heard and decision made. |
7. Legal Issues
- Unfair Preference
- Outcome: The court held that ordering security does not necessarily constitute unfair preference if the debtor resists providing security.
- Category: Substantive
- Stay of Bankruptcy Proceedings
- Outcome: The court held that the order for stay was made under s 64(1) of the Bankruptcy Act.
- Category: Procedural
- Security for Costs
- Outcome: The court reduced the amount of security for costs from $15,000 to $5,000.
- Category: Procedural
8. Remedies Sought
- Stay of Bankruptcy Proceedings
- Reduction of Security Amount
9. Cause of Actions
- Breach of Guarantee
10. Practice Areas
- Bankruptcy
- Appeals
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Watts v Shuttleworth | N/A | Yes | (1860) 5 H&N 234; 157 ER 1711 | N/A | Cited for the general proposition regarding acts of the petitioner causing the Debtor to lose his right of recourse against the Company and thus prejudicing his position as guarantor. |
| Bank of Montreal v Wilder | Supreme Court | Yes | [1987] 1 WWR 289 | Canada | Cited as an example where guarantors were released from their liability as a result of certain acts of the creditor. |
| Commercial Banking Company of Sydney Limited v Colonial Financiers of Australia Pty Ltd | N/A | Yes | [1972] VR 702 | Australia | Cited to support the argument that an order requiring security for the debt would result in an unfair preference. |
| Re Australian Co-Operative Development Society Limited | N/A | Yes | [1977] Qd R 66 | Australia | Cited to support the argument that an order requiring security for the debt would result in an unfair preference. |
| MV Yorke Motors v Edwards | N/A | Yes | [1982] 1 All ER 1024 | N/A | Cited to argue that it would be a wrongful exercise of discretion to order a defendant to pay a sum which he would never be able to pay as a condition of granting leave to defend in an application for summary judgment. |
13. Applicable Rules
| Rule Name |
|---|
| The Schedule of the Bankruptcy (Costs) Rules (Cap 20, R 2, 2000 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Section 99 Bankruptcy Act (Cap 20, 2000 Rev Ed) | Singapore |
| Sections 64(1), 64(2), 65(5) Bankruptcy Act (Cap 20, 2000 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Bankruptcy
- Stay of Proceedings
- Unfair Preference
- Security for Debt
- Security for Costs
- Guarantee
- Debtor
- Petitioner
15.2 Keywords
- Bankruptcy
- Unfair Preference
- Stay of Proceedings
- Security for Costs
- Guarantee
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Insolvency Law | 95 |
| Bankruptcy | 90 |
| Guarantee | 50 |
| Contract Law | 40 |
| Costs | 30 |
16. Subjects
- Bankruptcy
- Insolvency
- Civil Procedure