Ho Wing On Christopher v ECRC Land: Liquidator Liability for Costs in Insolvent Estate

In Ho Wing On Christopher and Others v ECRC Land Pte Ltd (in liquidation), the High Court of Singapore, presided over by Lai Kew Chai J, addressed the issue of whether liquidators are personally liable for a shortfall in costs when they unsuccessfully bring an action on behalf of an insolvent estate and breach the estate costs rule. The court dismissed the applicants' application, finding no basis to hold the liquidators personally liable for the shortfall after they had already been ordered to rectify their breach of the estate costs rule.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Second prayer of SIC 600611/2004 dismissed with costs. The liquidators were not held personally liable for the shortfall in costs.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Liquidators unsuccessfully brought an action for an insolvent estate. The court considered whether the liquidators were personally liable for costs.

1.7 Decision Date

25 January 2006

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Ho Wing On Christopher	Applicant	Individual	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
Shum Sze Keong	Applicant	Individual	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
Lee Yen Kee Ruby	Applicant	Individual	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
Law Kwok Fai Paul	Applicant	Individual	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
E-Zone (Plaza) Pte Ltd	Applicant	Corporation	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
East Coast Works Pte Ltd	Applicant	Corporation	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
Hong Kong Aberdeen Seafood Restaurant Pte Ltd	Applicant	Corporation	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
Nakamichi Pte Ltd	Applicant	Corporation	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
Cafe Al Fresco Pte Ltd	Applicant	Corporation	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann
ECRC Land Pte Ltd (in liquidation)	Respondent	Corporation	Application Upheld in Part	Partial	Oommen Mathew of Haq and Selvam
The Grande Group Limited	Applicant	Corporation	Application Dismissed	Lost	Lai Yew Fei of Rajah and Tann Francis Xavier of Rajah and Tann

3. Judges

Judge Name	Title	Delivered Judgment
Lai Kew Chai	Judge	Yes

4. Counsels

Counsel Name	Organization
Lai Yew Fei	Rajah and Tann
Francis Xavier	Rajah and Tann
Oommen Mathew	Haq and Selvam

4. Facts

ECRC Land Pte Ltd was incorporated in 1994 to redevelop premises into an amusement theme park.
In 1999, ECRC Land Pte Ltd was ordered to be wound up.
The liquidators took out Suit No 1210 of 2001 against the applicants based on fraud, breach of fiduciary duty, constructive trust and conspiracy.
The respondent’s claims were dismissed by Tay Yong Kwang J who only allowed the claims against the fifth and sixth applicants for operating expenses between January to March 1995.
The applicants sought an order that the liquidators be made personally liable for the shortfall in costs.

5. Formal Citations

Ho Wing On Christopher and Others v ECRC Land Pte Ltd (in liquidation), CWU 102/1999, SIC 600611/2004, [2006] SGHC 16

6. Timeline

Date	Event
1994-01-01	ECRC Land Pte Ltd incorporated.
1999-01-01	ECRC Land Pte Ltd ordered to be wound up.
2001-09-01	Liquidators took out Suit No 1210 of 2001 on behalf of the respondent against the applicants.
2004-08-31	Liquidators confirmed that the respondent’s remaining funds amounted to $18,105.76.
2004-11-22	Liquidators’ affidavit stated that the sums paid out for legal expenses were reasonably and properly incurred.
2006-01-26	Decision date.

7. Legal Issues

Liquidator's Personal Liability
- Outcome: The court held that the liquidators were not personally liable for the shortfall in costs.
- Category: Substantive
- Related Cases:
  - [1997] 1 WLR 1613
Breach of Estate Costs Rule
- Outcome: The court found that the liquidators had breached the estate costs rule but had already been ordered to rectify the breach.
- Category: Substantive

8. Remedies Sought

Order that the liquidators be made personally liable for the shortfall in costs.

9. Cause of Actions

No cause of actions

10. Practice Areas

Insolvency
Liquidation

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Norglen Ltd (in liquidation) v Reeds Rains Prudential Ltd	Court of Appeal	Yes	[1999] 2 AC 1	England and Wales	Cited for the principle that costs should be paid out of the respondent’s assets in priority to the liquidators’ remuneration and costs since the applicants had successfully defended the action.
Chee Kheong Mah Chaly v Liquidators of Baring Futures (Singapore) Pte Ltd	Court of Appeal	Yes	[2003] 2 SLR 571	Singapore	Cited for the rationale for the estate costs rule, that the successful defendant’s costs were entitled to priority over the liquidator’s expenses and remuneration and the claims of the unsecured creditors in general.
In re Home Investment Society	N/A	Yes	(1880) 14 Ch D 167	N/A	Cited for the principle that the liquidator should take the risk for his own actions.
In re Pacific Coast Syndicate, Limited	N/A	Yes	[1913] 2 Ch 26	N/A	Cited for the principle that the liquidator should take the risk for his own actions.
Metalloy Supplies Ltd v MA (UK) Ltd	English Court of Appeal	Yes	[1997] 1 WLR 1613	England and Wales	Cited for the principle that where a liquidator commenced an action in the name of the company, he would be a non-party to the action and could not be ordered to pay costs personally except in exceptional circumstances where there had been impropriety on the liquidator’s part.
Kumarasamy v Haji Daud	N/A	No	[1972] 2 MLJ 16	N/A	Cited to show that in situations where a liquidator brought proceedings in his own name, he could also be personally liable for costs though he might or might not be entitled to recover out of the company’s assets.
Re Wilson Lovatt & Sons Ltd	N/A	No	[1977] 1 All ER 274	N/A	Cited to show that in situations where a liquidator brought proceedings in his own name, he could also be personally liable for costs though he might or might not be entitled to recover out of the company’s assets.
Re Circuit Development Ltd, ex parte Mortimer	High Court of Auckland	No	[1981] 2 NZLR 243	New Zealand	Cited for the principle that rental arrears were expenses incurred in the winding up, they ought to be paid immediately, and the expenses of a winding up ought to be paid before the remuneration of the liquidator.
Re Beni-Felkai Mining Company, Limited	N/A	Yes	[1934] Ch 406	N/A	Cited for the principle that the expenses of a winding up ought to be paid before the remuneration of the liquidator.
In re Dominion of Canada Plumbago Company	N/A	Yes	(1884) 27 Ch D 33	N/A	Cited to affirm the estate costs rule.
In re Staffordshire Gas and Coke Company	N/A	Yes	[1893] 3 Ch 523	N/A	Cited to affirm the estate costs rule.
Deputy Commissioner of Taxation v Tideturn Pty Ltd	N/A	No	37 ACSR 152	Australia	Cited to show that a liquidator was held personally responsible for his failure to retain moneys for tax purposes.
Re AMF International Ltd; Chontow v Elles	N/A	No	[1995] 2 BCLC 529	N/A	Cited to show that Mr Elles had been ordered to bear the creditors’ costs himself because his unreasonable and reprehensible conduct had forced the creditors’ hand in taking out the application against him.
Hypec Electronics Pty Ltd (in liq) v Mead	Supreme Court of New South Wales	No	50 ACSR 448	Australia	Cited to show that the court had the jurisdiction to make the liquidator personally liable for costs.
In re Beddoe; Downes v Cottam	N/A	Yes	[1893] 1 Ch 547	N/A	Cited to show that in deciding whether a liquidator could be indemnified by the company for costs which he was ordered to pay, the test laid down in In re Beddoe; Downes v Cottam should apply; that is, whether the conduct which gave rise to the burden of costs ordered to be paid was reasonably as well as honestly incurred.
Belar Pty Ltd (in liq) v Mahaffey	Supreme Court of Queensland	No	[2000] 1 Qd R 477	Australia	Cited to show that where a company in liquidation unsuccessfully brought proceedings and the costs ordered against the company could almost certainly not be recovered from the company’s assets, the most usual order in such a case is that the liquidator pay the costs, and it is recognised that this makes the liquidator personally liable for such costs.
In re R Bolton and Company	N/A	No	[1895] 1 Ch 333	N/A	Cited to show that even where a liquidator was a party to proceedings and the assets of the insolvent company were insufficient for payment of the winning party’s costs, it has been long established that the liquidator would not be automatically deemed personally liable for the shortfall unless his conduct justified such personal liability.
Eastglen Ltd (in liq) v Grafton	N/A	No	[1996] 2 BCLC 279	N/A	Cited to show that there is a public interest in liquidators being able satisfactorily to carry out the duties which the statutory scheme confers on them.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

Liquidator
Insolvent estate
Estate costs rule
Winding up
Personal liability
Shortfall in costs

15.2 Keywords

Liquidator
Insolvency
Costs
Singapore
High Court
Personal Liability

17. Areas of Law

Area Name	Relevance Score
Insolvency Law	90
Winding Up	90
Costs	60
Civil Procedure	20

16. Subjects

Insolvency
Liquidation
Civil Procedure