Leun Wah Electric v Sigma Cable: Assignment of Debt, Unfair Preference, and Transaction at Undervalue
In the High Court of Singapore, the liquidators of Leun Wah Electric Co (Pte) Ltd (in liquidation) brought a claim against Sigma Cable Co (Pte) Ltd, seeking to void an assignment of debt. The liquidators argued that the assignment was made without consideration, constituted an unfair preference, and was a transaction at an undervalue. The court, presided over by Justice Choo Han Teck, ruled against the liquidators, finding that the assignment was supported by consideration, did not constitute a transaction at an undervalue, and was not made with the intention to create an unfair preference. The court dismissed the liquidators' claim.
1. Case Overview
1.1 Court
High Court1.2 Outcome
The liquidators' claim failed.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court addressed whether an assignment of debt was void due to lack of consideration, unfair preference, or transaction at an undervalue.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Sigma Cable Co (Pte) Ltd | Defendant | Corporation | Judgment for Defendant | Won | |
| Leun Wah Electric Co (Pte) Ltd (in liquidation) | Plaintiff | Corporation | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Choo Han Teck | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Gan Kam Yuin | Bih Li & Lee |
| Mark Chee | Bih Li & Lee |
| Conrad Campos | Robert Wang & Woo LLC |
4. Facts
- Leun Wah Electric was wound up by court order on 20 August 2004.
- Leun Wah Electric was a nominated subcontractor of Kajima in the construction of a wafer fabrication facility.
- Sigma Cable supplied electrical cables to Leun Wah Electric, some for the UMCi project.
- Kajima held a retention sum of US$236,892.24 due and payable to Leun Wah Electric.
- Leun Wah Electric assigned the money due from Kajima to Sigma Cable.
- Sigma Cable demanded payment of $1,525,531.77 from Leun Wah Electric on 30 May 2003.
- Leun Wah Electric claimed that $953,814.51 was due under the UMCi Base Project.
5. Formal Citations
- Leun Wah Electric Co (Pte) Ltd (in liquidation) v Sigma Cable Co (Pte) Ltd, OS 415/2005, [2006] SGHC 86
6. Timeline
| Date | Event |
|---|---|
| Sigma Cable demanded payment of outstanding invoices from Leun Wah Electric. | |
| Contract of assignment concluded. | |
| Leun Wah Electric gave notice of the assignment to Sigma Cable. | |
| Effective date of winding up of Leun Wah Electric. | |
| Kajima paid US$47,997.97 to Sigma Cable pursuant to the assignment. | |
| Court ordered Leun Wah Electric in liquidation. | |
| Liquidators questioned the validity of the assignment to Kajima. | |
| Court ordered dispute to be resolved between Leun Wah Electric and Sigma Cable. | |
| Judgment reserved. |
7. Legal Issues
- Consideration
- Outcome: The court held that the assignment was supported by good consideration because it was assigned in lieu of direct cash payment.
- Category: Substantive
- Sub-Issues:
- Past consideration
- Unfair Preference
- Outcome: The court held that the assignment was not made with the intention to create an unfair preference.
- Category: Substantive
- Transaction at an Undervalue
- Outcome: The court held that the assignment was not a transaction at an undervalue.
- Category: Substantive
8. Remedies Sought
- Order declaring that the assignment was void
9. Cause of Actions
- Avoidance of assignment
10. Practice Areas
- Commercial Litigation
- Insolvency Litigation
11. Industries
- Construction
- Electrical Engineering
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| No cited cases | |||||
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Bankruptcy Act (Cap 20, 2000 Rev Ed) | Singapore |
| Section 98 Bankruptcy Act (Cap 20, 2000 Rev Ed) | Singapore |
| Sections 99, 100(4) Bankruptcy Act (Cap 20, 2000 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Assignment
- Liquidation
- Unfair preference
- Transaction at an undervalue
- Consideration
- Insolvency
- Retention money
15.2 Keywords
- Assignment of debt
- Unfair preference
- Transaction at undervalue
- Insolvency
- Liquidation
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Insolvency Law | 95 |
| Winding Up | 90 |
| Unfair preferences | 80 |
| Avoidance of transfer | 75 |
| Undervalue Transaction | 70 |
| Assignment Law | 70 |
| Contract Law | 60 |
| Breach of Contract | 40 |
16. Subjects
- Insolvency
- Contract
- Assignment
- Banking
- Finance