Amrae Benchuan Trading v Tan Te Teck: Undue Preference & Company Liquidation

In Amrae Benchuan Trading Pte Ltd (in liquidation) v Tan Te Teck Gregory, the High Court of Singapore dismissed the liquidator's claim against Tan Te Teck Gregory, a former employee, seeking to recover payments made by the company prior to its winding up. The liquidator argued that these payments constituted an undue preference under s 329(1) of the Companies Act. Sundaresh Menon JC held that the payments were not influenced by a desire to prefer the defendant over other creditors, and therefore, the claim failed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Action dismissed with costs.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Liquidator's claim to recover payments to ex-employee as undue preference fails. Court finds payments were not influenced by desire to prefer.

1.7 Decision Date

12 October 2006

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Amrae Benchuan Trading Pte Ltd (in liquidation)	Plaintiff	Corporation	Claim Dismissed	Lost	Narayanan Vijay Kumar of Vijay & Co
Tan Te Teck Gregory	Defendant	Individual	Judgment for Defendant	Won

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Narayanan Vijay Kumar	Vijay & Co

4. Facts

The plaintiff is a company in liquidation.
The defendant was an employee of the plaintiff from 1994 until December 2001.
The defendant was paid a monthly salary of $2,400.
The plaintiff made two payments to the defendant on 7 and 18 September 2001, totaling $80,000.
The payments were made as repayment of debts owed to the defendant.
The defendant was married to the niece of one of the plaintiff's directors.
The defendant paid the money that had been repaid to him by the plaintiff, over to Axum, which then went back to the plaintiff.

5. Formal Citations

Amrae Benchuan Trading Pte Ltd (in liquidation) v Tan Te Teck Gregory, Suit 832/2005, [2006] SGHC 181

6. Timeline

Date	Event
1994-01-01	Defendant began employment with the plaintiff.
2001-09-07	Plaintiff made a payment of $50,000 to the defendant.
2001-09-18	Plaintiff made a payment of $30,000 to the defendant.
2001-12-01	Defendant's employment with the plaintiff ended.
2003-08-22	Niklex presented a petition to wind up the company.
2003-09-19	Company was wound up.
2005-05-25	Mr Don Ho Mun Tuke was appointed as the liquidator.
2006-07-26	Hearing commenced.
2006-10-13	Judgment reserved.

7. Legal Issues

Undue Preference
- Outcome: The court held that the payments were not influenced by a desire to prefer the defendant and therefore did not constitute an undue preference.
- Category: Substantive
- Sub-Issues:
  - Influence of desire to prefer
  - Rebuttal of presumption of influence
- Related Cases:
  - [2000] 1 SLR 84
  - [1990] BCLC 324
Definition of Associate
- Outcome: The court found that the defendant was an associate of the company due to his relationship with a director's niece, extending the period for invalidating the payments.
- Category: Substantive
- Sub-Issues:
  - Employee exception
  - Relationship through marriage

8. Remedies Sought

Recovery of payments made to the defendant

9. Cause of Actions

Recovery of undue preference

10. Practice Areas

Liquidation
Commercial Litigation

11. Industries

Trading

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Tang Yoke Kheng v Lek Benedict	High Court	Yes	[2004] 3 SLR 12	Singapore	Cited as part of the series of lawsuits related to the business relationship involving the plaintiff, its former directors, the defendant, and Niklex Supply Co.
Tang Yoke Kheng v Lek Benedict (No 2)	High Court	Yes	[2004] 4 SLR 788	Singapore	Cited for Ang JC's observations regarding potential unfair preference, which drove the liquidator's action.
Tang Yoke Kheng v Lek Benedict	Court of Appeal	Yes	[2005] 3 SLR 263	Singapore	Cited as part of the series of lawsuits related to the business relationship involving the plaintiff, its former directors, the defendant, and Niklex Supply Co.
Re Tang Yoke Kheng	High Court	Yes	[2006] 1 SLR 351	Singapore	Cited as part of the series of lawsuits related to the business relationship involving the plaintiff, its former directors, the defendant, and Niklex Supply Co.
Amrae Benchuan Trading Pte Ltd v Lek Benedict	High Court	Yes	[2006] 3 SLR 141	Singapore	Cited extensively for Lai Siu Chiu J's findings regarding Niklex, Mr. Chan, and the liquidator's conduct, and for the findings on undue preference regarding Lek and Lim.
Show Theatres Pte Ltd v Shaw Theatres Pte Ltd	Court of Appeal	Yes	[2002] 4 SLR 145	Singapore	Cited for the Court of Appeal's observation on the unsatisfactory nature of importing provisions from the personal insolvency regime into that for corporate insolvency.
Korea Asset Management Corp v Daewoo Singapore Pte Ltd	High Court	Yes	[2004] 1 SLR 671	Singapore	Cited for the principle that liquidators should view matters through objective lenses and maintain neutrality.
Liquidator of W&P Piling Pte Ltd v Chew Yin What	High Court	Yes	[2004] 3 SLR 164	Singapore	Cited for the principle that court-appointed liquidators are officers of the court and owe a higher duty to the court than to their clients.
In re Rolls Razor Ltd (No 2)	Chancery Division	Yes	[1970] Ch 576	England and Wales	Cited for the principle that the liquidator is presumed to be neutral, independent minded and acting in the best interests of the company.
Cloverbay Ltd v Bank of Credit and Commerce International SA	Chancery Division	Yes	[1991] Ch 90	England and Wales	Cited for the principle that the liquidator is presumed to be neutral, independent minded and acting in the best interests of the company.
Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd	Court of Appeal	Yes	[2006] 3 SLR 769	Singapore	Cited regarding the implications of not having an agreed bundle of documents.
Re Libra Industries Pte Ltd	High Court	Yes	[2000] 1 SLR 84	Singapore	Cited for the application of s 329 of the Act to the avoidance of undue preferences, following Re MC Bacon Ltd and for the approach to be taken in determining whether the presumption of influence has been rebutted.
Re MC Bacon Ltd	High Court	Yes	[1990] BCLC 324	England and Wales	Cited for the principles regarding undue preference, specifically the need to establish a desire to improve the creditor's position in the event of an insolvent liquidation.
Wills v Corfe Joinery Ltd	High Court	Yes	[1998] 2 BCLC 75	England and Wales	Cited for the principle that the burden falls on the recipient of the payment to rebut the presumption that the payment was influenced by the relevant desire.
Soh Gim Chuan v Koh Hai Keong	High Court	Yes	[2002] 4 SLR 212	Singapore	Cited for the approach in determining whether there was unfair preference, focusing on whether the bankrupt had been influenced by a desire to put the payee in a better position.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Bankruptcy Act (Cap 20, 2000 Rev Ed)	Singapore
Companies Act (Cap 50, 1994 Rev Ed)	Singapore
s 329(1) Companies Act (Cap 50, 1994 Rev Ed)	Singapore
ss 98, 99, 100 Bankruptcy Act (Cap 20, 2000 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Undue preference
Liquidation
Associate
Insolvent liquidation
Rebuttable presumption
Person connected with a company

15.2 Keywords

Undue preference
Liquidation
Associate
Companies Act
Bankruptcy Act

17. Areas of Law

Area Name	Relevance Score
Winding Up	90
Insolvency Law	85
Undue Preference	75
Company Law	70
Corporate Insolvency	65
Liquidator	50
Fiduciary Duties	30
Commercial Disputes	25

16. Subjects

Insolvency
Corporate Law
Civil Procedure