Fustar Chemicals Ltd v Ong Soo Hwa: Proof of Debt in Company Winding Up
Fustar Chemicals Ltd ("FCL") applied to reverse the liquidator's decision regarding its proof of debt in the liquidation of Fustar Chemicals Pte Ltd ("the Company"). The liquidator, Ong Soo Hwa ("OSH"), rejected FCL's claim due to deficiencies in evidence. The High Court of Singapore, presided over by Belinda Ang Saw Ean J, dismissed FCL's application on 31 July 2008, finding that FCL had not established the debt on a balance of probabilities. The case concerned a debt allegedly owed by the Company to FCL for supplies of goods, and the court considered whether the liquidator was entitled to go behind audited accounts and audit confirmations to require satisfactory evidence of the debt.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed with costs.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Fustar Chemicals Ltd's proof of debt in Fustar Chemicals Pte Ltd's liquidation was rejected due to insufficient evidence. The court dismissed Fustar Chemicals Ltd's application.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Fustar Chemicals Ltd | Plaintiff | Corporation | Application Dismissed | Lost | |
| Ong Soo Hwa (liquidator of Fustar Chemicals Pte Ltd) | Defendant | Individual | Application Dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Belinda Ang Saw Ean | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| N Sreenivasan | Straits Law Practice LLC |
| Kannan Ramesh | Tan Kok Quan Partnership |
4. Facts
- FCL filed a proof of debt for $614,560.71 in the liquidation of the Company.
- The debt related to supplies of goods such as paraffin wax.
- FCL submitted audited accounts and audit confirmations to support its claim.
- The liquidator rejected the proof of debt due to deficiencies in the evidence.
- The Company's auditors had highlighted that they were unable to obtain independent confirmation of the amount due to FCL.
- FCL was unable to produce primary documents such as contracts, invoices, and delivery orders.
- The directors of the Company were unable to shed light on the past transactions between the Company and FCL.
5. Formal Citations
- Fustar Chemicals Ltd v Ong Soo Hwa (liquidator of Fustar Chemicals Pte Ltd), OS 1088/2007, [2008] SGHC 198
6. Timeline
| Date | Event |
|---|---|
| The Company was incorporated in Singapore. | |
| Ng Eharn was appointed as director. | |
| The Company was placed in Members’ voluntary liquidation. | |
| OSH advertised in the Singapore Government Gazette and the Business Times to invite creditors of the Company to file proof of debt. | |
| FCL submitted its proof of debt. | |
| FCL’s proof of debt was rejected. | |
| Liquidator’s statutory declaration. | |
| FCL filed proceedings challenging the rejection of its proof of debt. | |
| Mr Tam Chee Chong interviewed Chan & Chan. | |
| Mr Tam interviewed GBK. | |
| FCL’s application was dismissed with costs. | |
| Reasons for decision published. |
7. Legal Issues
- Proof of Debt
- Outcome: The court held that FCL had not established the debt on a balance of probabilities.
- Category: Substantive
- Sub-Issues:
- Sufficiency of evidence
- Admissibility of audited accounts
- Admissibility of audit confirmations
- Related Cases:
- [1989] SLR 876
- Liquidator's Duty
- Outcome: The court held that the liquidator is entitled to go behind audited accounts and audit confirmations to require satisfactory evidence of the debt proved for.
- Category: Substantive
- Sub-Issues:
- Duty to investigate
- Duty to distribute assets
- Not bound by estoppels
- Related Cases:
- [1955] AC 491
- [1907] 1 KB 155
8. Remedies Sought
- Reversal of liquidator's decision
- Admission of proof of debt in full
9. Cause of Actions
- Proof of Debt
10. Practice Areas
- Commercial Litigation
- Insolvency
- Company Law
11. Industries
- Chemicals
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Ice-Mack Pte Ltd; AA Valibhoy & Sons (1907) Pte Ltd v Official Receiver | High Court | Yes | [1989] SLR 876 | Singapore | Cited to support the proposition that since FCL and the Company were related entities, the liquidator is entitled to go behind the audit confirmations and audited accounts. |
| Wong Ser Wan v Ng Bok Eng Holdings Pte Ltd and Anor | High Court | Yes | [2004] 4 SLR 365 | Singapore | Cited to show the acrimonious legal proceedings between NCL and WSW. |
| Ng Bok Eng Holdings Pte Ltd and Anor v Wong Ser Wan | Court of Appeal | Yes | [2005] 4 SLR 561 | Singapore | Cited to show the acrimonious legal proceedings between NCL and WSW. |
| Wong Ser Wan v Ng Cheong Ling | High Court | Yes | [2006] 1 SLR 416 | Singapore | Cited to show the acrimonious legal proceedings between NCL and WSW. |
| Grand Grain Investment Ltd v Cosimo Borrelli & Anor | N/A | Yes | [2006] HKCU 872 | Hong Kong | Cited for the proposition that weight should be given to audited accounts. |
| Gobind Lalwani v Basco Enterprises Pte Ltd | High Court | Yes | [1999] 3 SLR 354 | Singapore | Cited for the proposition that audit confirmations constitute prima facie evidence of FCL’s claim. |
| Capital Realty Pte Ltd v Chip Thye Enterprises (Pte) Ltd | High Court | Yes | [2000] 4 SLR 548 | Singapore | Cited for the proposition that audit confirmations constitute prima facie evidence of FCL’s claim. |
| Thomson Plaza (Pte) Ltd v Liquidators of Yaohan Department Store Singapore Pte Ltd (in liquidation) | High Court | Yes | [2001] 3 SLR 437 | Singapore | Cited for the principle that the court hears the application to reverse the liquidator’s adjudication of a proof of debt de novo. |
| Westpac Banking Corporation and Others v Totterdell and Another | N/A | Yes | [1997] 142 FLR 137 | N/A | Cited for the principle that on the hearing of the application de novo, FCL has to show that the liquidator’s decision was wrong as there was a real debt provable in liquidation. |
| Bellmex International Ltd (in liquidation) v British American Tobacco Ltd and Anor | N/A | Yes | [2001] 1 BCLC 91 | N/A | Cited for the principle that a failure to provide evidence and documents supporting the proof by the proving creditor justifies the liquidator in rejecting the proof. |
| Government of India v Taylor | Privy Council | Yes | [1955] AC 491 | N/A | Cited for the duty of the liquidator to discharge out of the assets in his hands those claims which are legally enforceable, and to hand over any surplus to the contributories. |
| Re Adam Holdings Ltd | N/A | Yes | [1985] 2 HKC 608 | Hong Kong | Cited for the law recognises that the liquidator is in the same position as the trustee in bankruptcy and since the liquidator is not generally bound by estoppels against the company or an account stated with the company, he may properly reject a proof of debt if the liability, though enforceable against the company, unjustly prejudices the interests of the creditors or contributories of the assets available for distribution. |
| Re Home and Colonial Insurance Co Ltd | N/A | Yes | [1930] 1 Ch 102 | N/A | Cited for the law recognises that the liquidator is in the same position as the trustee in bankruptcy. |
| Rosseau v Jay-O-Bees | Supreme Court of New South Wales | Yes | [2004] NSWSC 818 | Australia | Cited for the principle that the liquidator is not generally bound by estoppels against the company or an account stated with the company. |
| Re van Laun, ex p Chatterton | N/A | Yes | [1907] 1 KB 155 | N/A | Cited for the trustee’s right and duty when examining a proof for the purpose of the admitting or rejecting it is to require some satisfactory evidence that the debt on which the proof is founded is a real debt. |
| Re van Laun, ex p Chatterton | Court of Appeal | Yes | [1907] 2 KB 23 | N/A | Cited for the trustee’s right and duty when examining a proof for the purpose of the admitting or rejecting it is to require some satisfactory evidence that the debt on which the proof is founded is a real debt. |
| ERPIMA SA v Chee Yoh Chuang & Anor | High Court | Yes | [1998] 1 SLR 83 | Singapore | Cited for the quasi-judicial role of a liquidator whose approach to the entire process of proof (admission or rejection) must be entirely as if he is sitting in judgment like a judicial officer. |
13. Applicable Rules
| Rule Name |
|---|
| Rule 92 of the Companies (Winding-Up) Rules |
| Rule 93 of the Companies (Winding Up) Rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies (Winding Up) Rules | Singapore |
| Evidence Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Proof of debt
- Liquidation
- Audited accounts
- Audit confirmations
- Liquidator
- Balance of probabilities
- Inter-company transactions
- Paraffin wax
15.2 Keywords
- Proof of debt
- Liquidation
- Winding up
- Companies
- Singapore
- High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Winding Up | 95 |
| Proof of Debt | 80 |
| Liquidator's Duties | 70 |
| Company Law | 60 |
| Audited Accounts | 50 |
| Bankruptcy | 40 |
| Evidence Law | 30 |
| Estoppel | 25 |
| Duty to Account | 20 |
| Contract Law | 15 |
| Commercial Disputes | 10 |
16. Subjects
- Insolvency
- Company Law
- Civil Procedure