Altus Technologies v Oversea-Chinese Banking Corp: Set-Off Rights in Judicial Management
Altus Technologies Pte Ltd (under judicial management) sought a declaration against Oversea-Chinese Banking Corp Ltd (OCBC) to prevent OCBC from exercising its right of contractual set-off against a sum owed to Altus by Samsung Corning. The High Court dismissed Altus's application, holding that OCBC was entitled to exercise its contractual right of set-off and that the pari passu principle did not apply in the context of judicial management.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court held that OCBC could exercise its contractual right of set-off against Altus Technologies, which was under judicial management.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Oversea-Chinese Banking Corp Ltd | Defendant | Corporation | Judgment for Defendant | Won | |
| Altus Technologies Pte Ltd (under judicial management) | Plaintiff | Corporation | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Lee Eng Beng | Rajah & Tann LLP |
| Loke Shiu Meng | Rajah & Tann LLP |
| Nicholas Narayanan | Nicholas & Co |
4. Facts
- The plaintiff was placed under judicial management on 13 February 2009.
- Samsung Corning owed the plaintiff US$627,260.
- Samsung Corning mistakenly transferred US$627,260 into the plaintiff’s account with the defendant.
- The defendant sought to set-off the moneys in the plaintiff’s bank account against the debt owed by the plaintiff.
- The plaintiff owed the defendant more than S$2m.
5. Formal Citations
- Altus Technologies Pte Ltd (under judicial management) v Oversea-Chinese Banking Corp Ltd, OS 436/2009, [2009] SGHC 159
6. Timeline
| Date | Event |
|---|---|
| Plaintiff placed under judicial management | |
| Eight invoices issued to Samsung Corning | |
| Eight invoices issued to Samsung Corning | |
| Samsung Corning informed the plaintiff that it had processed the payment for the invoices | |
| It was discovered that Samsung Corning had transferred the sum of US$627,260 into the plaintiff’s account with the defendant | |
| Defendant stated that it was exercising its right of set-off against the plaintiff | |
| Samsung Corning issued a request to its own bank to cancel the payment order | |
| Samsung Corning sent the defendant a letter instructing the latter to transfer the funds back to its account | |
| First day of hearing | |
| Second day of hearing | |
| Decision Date |
7. Legal Issues
- Right of Set-Off
- Outcome: The court held that the defendant was entitled to exercise its contractual right of set-off.
- Category: Substantive
- Related Cases:
- [2009] 2 SLR 769
- [1994] 1 SLR 734
- Judicial Management
- Outcome: The court declined to exercise its discretion under s 227X(b) of the Companies Act to apply s 327(2) of the same Act read with s 88 of the Bankruptcy Act to the judicial management of the plaintiff.
- Category: Substantive
- Related Cases:
- [2005] 3 SLR 375
- Pari Passu Principle
- Outcome: The court held that the pari passu principle does not apply in the context of judicial management.
- Category: Substantive
- Related Cases:
- [2005] 3 SLR 375
- Locus Standi
- Outcome: The court held that the plaintiff lacked locus standi to seek a declaration that the moneys were paid to the defendant by Samsung Corning under a mistake of fact and that the defendant had to account and pay to Samsung Corning the moneys paid by mistake.
- Category: Procedural
- Related Cases:
- [2006] 1 SLR 112
8. Remedies Sought
- Declaration
- Account
- Payment
9. Cause of Actions
- Declaration that the defendant was not entitled to exercise its right of contractual set-off
- Breach of Part VIIIA of the Companies Act
10. Practice Areas
- Commercial Litigation
- Insolvency
- Banking
11. Industries
- Electronics
- Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Karaha Bodas Co LLC v Pertamina Energy Trading Ltd | High Court | Yes | [2006] 1 SLR 112 | Singapore | Cited for the principle that a plaintiff cannot commence proceedings seeking a declaration that A owed money to B, when the plaintiff was neither A nor B. |
| Lanxess Pte Ltd v APP Chemicals International (Mau) Ltd | High Court | Yes | [2009] 2 SLR 769 | Singapore | Cited for the principle that the notice in writing of the assignment must be clear, unambiguous and unconditional. |
| Bernard & Shaw Ltd v Shaw | N/A | Yes | [1951] 2 All ER 267 | N/A | Cited for the principle that it would have been incumbent on it not only to show that there was indeed a mistake of fact but that the mistake had caused it to make the payment. |
| Good Property Land Development Pte Ltd v Societe-Generale | High Court | Yes | [1996] 2 SLR 239 | Singapore | Cited for the proposition that a bank could not exercise its right of set-off to retain funds paid to the credit of a company’s account after the commencement of insolvency, but distinguished as applying to winding-up, not judicial management. |
| Re Wan Soon Construction Pte Ltd | High Court | Yes | [2005] 3 SLR 375 | Singapore | Cited for the intended purpose of s 227X(b) and that the pari passu principle does not apply in the context of judicial management. |
| Electro Magnetic (S) Ltd v Development Bank of Singapore Ltd | Court of Appeal | Yes | [1994] 1 SLR 734 | Singapore | Cited for the principle that a creditor may exercise a contractual right of set-off against a company placed under judicial management. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Bankruptcy Act (Cap 20, 2000 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Judicial management
- Set-off
- Pari passu principle
- Mistake of fact
- Locus standi
- Contractual right of set-off
15.2 Keywords
- Judicial Management
- Set-Off
- Companies Act
- Bankruptcy Act
- Singapore
- Banking
- Insolvency
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Judicial Management | 90 |
| Insolvency Law | 80 |
| Company Law | 75 |
| Right of Set-Off | 70 |
| Bankruptcy | 60 |
| Banking and Finance | 50 |
| Mistake of fact | 30 |
| Litigation | 30 |
| Commercial Disputes | 25 |
| Estoppel | 20 |
16. Subjects
- Companies
- Receiver and manager
- Judicial management order
- Right of set-off