Kon Yin Tong v Leow Boon Cher: Liquidators' Claim for Fraudulent Transactions
Kon Yin Tong and another, as liquidators of Woon Contractor Pte Ltd, brought a claim in the High Court of Singapore on 14 October 2011 against Leow Boon Cher, Ong Chiew Ha, Aim Top Enterprise Pte Ltd, Ong Key Young, Ong Eng Seng, Western Express Resources Agency, and Yew San Construction Pte Ltd, alleging fraudulent and irregular transactions to siphon off the company's assets while insolvent. Judith Prakash J found the company insolvent and ruled in favor of the liquidators against several defendants, ordering repayment of funds and surrender of assets, but dismissed the claim against Yew San Construction Pte Ltd.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for the Plaintiffs in part; Claim against Yew San dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Liquidators of Woon Contractor Pte Ltd seek to recover funds from former directors and related firms, alleging fraudulent transactions and insolvency.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Kon Yin Tong | Plaintiff | Individual | Judgment for Plaintiff in part | Partial | |
| Yew San Construction Pte Ltd | Defendant | Corporation | Claim Dismissed | Dismissed | |
| Leow Boon Cher | Defendant | Individual | Judgment against Defendant in part | Lost | |
| Ong Chiew Ha | Defendant | Individual | Judgment against Defendant in part | Lost | |
| Aim Top Enterprise Pte Ltd | Defendant | Corporation | Judgment against Defendant in part | Lost | |
| Ong Key Young | Defendant | Individual | Judgment against Defendant in part | Lost | |
| Ong Eng Seng | Defendant | Individual | Judgment against Defendant in part | Lost | |
| Western Express Resources Agency | Defendant | Other | Judgment against Defendant in part | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Judge | Yes |
4. Counsels
4. Facts
- Woon Contractor Pte Ltd was set up in 1995 as a successor to a partnership, Woon Contractor.
- Leow Boon Cher and Ong Chiew Ha were the directors and shareholders of the Company.
- A winding up order was made against the Company on 20 May 2005.
- The plaintiffs alleged that the Company was insolvent as at 30 April 2003 and 31 August 2003.
- The plaintiffs alleged that the Directors had masterminded a scheme to defraud the Company’s creditors.
- The Company sold a 10-tonne lorry to Aim Top on 1 October 2003 and leased it back.
- The Company paid Yew San Construction Pte Ltd $13,111.35 for excavation works.
5. Formal Citations
- Kon Yin Tong and another v Leow Boon Cher and others, Suit No 37 of 2009, [2011] SGHC 228
6. Timeline
| Date | Event |
|---|---|
| Woon Contractor Pte Ltd set up as successor to partnership, Woon Contractor. | |
| Fernvale Project novated to the Company as main contractor. | |
| Plaintiffs averred Company was insolvent. | |
| Company purportedly paid Wera $2,500 for work as a “subcontractor”. | |
| Soon Li Heng completed earthworks under their sub-contract for the Fernvale Project. | |
| Company received a claim for some $630,000 from Soon Li Heng. | |
| Company purportedly paid Wera another $10,000 for work as a “sub-contractor”. | |
| Soon Li Heng’s lawyers sent the Company a letter of demand in respect of its claim. | |
| Antah invoiced the Company for $35,000 in respect of services. | |
| A sum of $1,000 was purportedly paid to Wera. | |
| HDB paid the Company a sum of approximately $550,000 for work done on the Fernvale Project. | |
| Soon Li Heng commenced legal action against the Company in High Court Suit 863 of 2003. | |
| Plaintiffs averred that the liabilities of the Company exceeded its assets. | |
| Aim Top Enterprise Pte Ltd was incorporated. | |
| Company started selling construction equipment to Aim Top. | |
| Company leased back a 10-tonne lorry from Aim Top. | |
| Company purportedly leased an SK-200 excavator-with-breaker from Aim Top at $7,000 per month. | |
| Company leased to Aim Top a PC200/SK200 excavator for $5,800 per month. | |
| Company sold a used excavator for $57,750 to Ban Guan. | |
| Company paid a sum of $13,111.35 to Yew San for purported excavation work. | |
| Soon Li Heng sent a statutory demand to the Company for the judgment sum. | |
| Mr Leow made the declaration of the Company’s inability to continue business by reason of its liabilities. | |
| A winding up order was made against the Company and the plaintiffs were then appointed its joint liquidators. | |
| Judgment Date |
7. Legal Issues
- Insolvency
- Outcome: The court found that the Company was insolvent both on and after 30 April 2003 and on 31 August 2003.
- Category: Substantive
- Sub-Issues:
- Cash flow test
- Balance sheet test
- Contingent liabilities
- Prospective liabilities
- Fraudulent Trading
- Outcome: The court found that certain transactions were sham transactions meant to siphon money from the Company.
- Category: Substantive
- Sub-Issues:
- Sham transactions
- Siphoning of assets
- Intent to defraud creditors
- Unfair Preference
- Outcome: The court found that certain payments constituted an unfair preference in favor of associates of the Company.
- Category: Substantive
- Sub-Issues:
- Transactions at an undervalue
- Associate of the company
- Desire to produce a better position in bankruptcy
- Breach of Fiduciary Duties
- Outcome: The court found that the Directors acted in breach of their duties in procuring certain transactions.
- Category: Substantive
- Sub-Issues:
- Directors' duties
- Acting dishonestly
- Mala fides
- Against the interests of the company
8. Remedies Sought
- Recovery of payments
- Surrender of assets
- Damages
9. Cause of Actions
- Breach of Fiduciary Duty
- Fraudulent Trading
- Unfair Preference
10. Practice Areas
- Liquidation
- Commercial Litigation
- Construction Disputes
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Chip Thye Enterprises Pte Ltd (in liquidation) v Phay Gi Mo & Ors | High Court | Yes | [2004] 1 SLR(R) 434 | Singapore | Cited for the principle that there is no single test for insolvency and that the determination of solvency requires scrutinizing all relevant evidence available. |
| Tong Tien See Construction Pte Ltd (in liquidation) v Tong Tien See & Ors | High Court | Yes | [2002] 3 SLR 76 | Singapore | Cited for the principle that insolvency is a question of fact and that a company is insolvent when it is unable to meet current demands, irrespective of its assets. |
| Tang Yoke Kheng v Lek Benedict | High Court | Yes | [2004] 4 SLR(R) 788 | Singapore | Cited for the elements required to succeed under section 340 of the Companies Act regarding fraudulent trading. |
| Tang Yoke Kheng v Lek Benedict | Court of Appeal | Yes | [2005] 3 SLR(R) 263 | Singapore | Cited for the standard of proof required in civil claims involving fraud. |
| Liquidator of Leong Seng Hin Piling Pte Ltd v Chan Ah Lek and others | High Court | Yes | [2007] 2 SLR(R) 77 | Singapore | Cited for the principle that the standard of honesty is not measured according to a private standard but evaluated against objective facts. |
| Show Theatres Pte Ltd (in liquidation) v Shaw Theatres Pte Ltd | High Court | Yes | [2002] 4 SLR 145 | Singapore | Cited for the interpretation of 'individual' in the Bankruptcy Act as referring to a company when applied to companies being wound up. |
| Re Tiong Polestar Engineering Pte Ltd (formerly known as Polestar Engineering (S) Pte Ltd) | High Court | Yes | [2003] 4 SLR(R) 1 | Singapore | Cited for the principle that an intention to prefer an associate is sufficient to constitute unfair preference. |
| Bank of Australasia v Hall | High Court of Australia | Yes | (1907) 4 CLR 1514-1528 | Australia | Cited for the distinction between a debtor who can pay debts as they fall due and one who can only pay at some future time. |
| In re Patrick and Lyon, Limited | Chancery Division | Yes | [1933] Ch 786 | England and Wales | Cited for the definition of 'defraud' and 'fraudulent purpose' as connoting actual dishonesty. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 254(2) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 340 of the Companies Act | Singapore |
| Section 329 of the Companies Act | Singapore |
| Bankruptcy Act (Cap 20, 2008 Rev Ed) | Singapore |
| Section 98(1) of the Bankruptcy Act | Singapore |
| Section 100(1)(a) of the Bankruptcy Act | Singapore |
| Section 100(2) of the Bankruptcy Act | Singapore |
| Section 100(3) of the Bankruptcy Act | Singapore |
| Section 101 of the Bankruptcy Act | Singapore |
| Section 101(2) of the Bankruptcy Act | Singapore |
| Section 99 of the Bankruptcy Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Insolvency
- Fraudulent trading
- Unfair preference
- Sham transaction
- Directors' duties
- Liquidation
- Associate
- Undervalue transaction
- Cash flow test
- Balance sheet test
15.2 Keywords
- Insolvency
- Fraudulent transactions
- Unfair preference
- Liquidators
- Directors
- Construction company
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Winding Up | 95 |
| Unfair preferences | 85 |
| Fraud and Deceit | 80 |
| Bankruptcy | 75 |
| Fiduciary Duties | 70 |
| Insolvency Law | 70 |
| Director's Liability | 65 |
| Company Law | 60 |
| Contract Law | 30 |
16. Subjects
- Insolvency
- Fraud
- Corporate Governance
- Civil Litigation