Chimbusco v Jalalludin: Guarantee Enforcement & Insolvency Proceedings
In a Singapore High Court decision on 2013-02-28, Justice Vinodh Coomaraswamy heard insolvency proceedings brought by Chimbusco International Petroleum (Singapore) Pte Ltd against Jalalludin bin Abdullah and other guarantors of Gas Trade (S) Pte Ltd's debt. Chimbusco sought to bankrupt individual guarantors and wind up corporate guarantors based on guarantees for Gas Trade's debt. The guarantors disputed their liability, alleging misrepresentation. Initially, the court stayed the proceedings on the condition that the guarantors provide security, which they failed to do. Consequently, the court adjudicated the individual guarantors bankrupt and ordered the winding up of the corporate guarantors. The guarantors' appeals against this decision were dismissed.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Bankruptcy orders granted against individual guarantors and winding up orders granted against corporate guarantors.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment regarding Chimbusco's insolvency proceedings against guarantors of Gas Trade's debt, focusing on the validity of guarantees and conditions for stay.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Chimbusco International Petroleum (Singapore) Pte Ltd | Plaintiff | Corporation | Judgment for Plaintiff | Won | Wendy Tan, Tony Tan |
| Jalalludin bin Abdullah | Defendant, Appellant | Individual | Bankruptcy Order Granted | Lost | Andre Maniam, Derek Tan |
| Mohd Zain Bin Abdullah | Defendant, Appellant | Individual | Bankruptcy Order Granted | Lost | Andre Maniam, Derek Tan |
| Mohammad Bin Abdul Rahman | Defendant | Individual | Bankruptcy Order Granted | Lost | Andre Maniam, Derek Tan |
| Paradigm Shipping Pte Ltd | Defendant, Appellant | Corporation | Winding Up Order Granted | Lost | Andre Maniam, Derek Tan |
| Hir Huat Trading Pte Ltd | Defendant, Appellant | Corporation | Winding Up Order Granted | Lost | Andre Maniam, Derek Tan |
| Peta Marine Services Pte Ltd | Defendant | Corporation | Winding Up Order Granted | Lost | Andre Maniam, Derek Tan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Vinodh Coomaraswamy | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Wendy Tan | Stamford Law Corporation |
| Tony Tan | Stamford Law Corporation |
| Andre Maniam | WongPartnership LLP |
| Derek Tan | WongPartnership LLP |
| Karen Ang | Insolvency & Public Trustee's Office |
4. Facts
- Chimbusco had mutual dealings with Gas Trade, resulting in Gas Trade owing Chimbusco US$13,015,342.03.
- Chimbusco obtained personal and corporate guarantees from ten guarantors for Gas Trade's debt.
- Chimbusco commenced winding up proceedings against corporate guarantors and bankruptcy proceedings against individual guarantors.
- The guarantors claimed they were entitled to rescind the guarantees due to alleged misrepresentations by Chimbusco's representative.
- The guarantors alleged an oral agreement with Chimbusco that was not fulfilled.
- The court found the guarantors' defenses to be 'shadowy' and imposed a condition of security for a stay of proceedings.
- The guarantors failed to provide the required security.
5. Formal Citations
- Chimbusco International Petroleum (Singapore) Pte Ltd v Jalalludin bin Abdullah, , [2013] SGHC 55
6. Timeline
| Date | Event |
|---|---|
| Guarantees executed by individual and corporate guarantors | |
| Chimbusco demands payment from Gas Trade and guarantors | |
| Statutory demands served on corporate guarantors | |
| Statutory demands served on personal guarantors | |
| Chimbusco commences winding up proceedings against two corporate guarantors | |
| Chimbusco commences bankruptcy proceedings against one guarantor | |
| Chimbusco commences winding up proceedings against two more guarantors | |
| Gas Trade and guarantors initiate Suit No 347 against Chimbusco | |
| Chimbusco commences bankruptcy proceedings against two more guarantors | |
| Chimbusco commences winding up proceedings against remaining guarantors and Gas Trade | |
| Winding up orders made against four corporate guarantors | |
| Bankruptcy applications heard by Assistant Registrar Elaine Chew | |
| Lai Siu Chiu J orders Gas Trade to be wound up | |
| High Court stays insolvency proceedings on condition of security | |
| Guarantors fail to provide security | |
| Bankruptcy and winding up orders granted unconditionally | |
| Decision Date |
7. Legal Issues
- Enforceability of Guarantees
- Outcome: The court found the guarantors' defenses to be 'shadowy' but did not make unconditional insolvency orders, instead imposing a condition of security.
- Category: Substantive
- Sub-Issues:
- Misrepresentation
- Lack of Authority
- Formal Validity of Guarantee
- Conditions for Stay of Insolvency Proceedings
- Outcome: The court initially stayed the insolvency proceedings on the condition that the guarantors provide security, but later lifted the stay when the security was not provided.
- Category: Procedural
- Sub-Issues:
- Adequacy of Security
- Discretion of Court
- Triable Issues
- Standard for Resisting Insolvency Proceedings
- Outcome: The court applied the summary judgment test of 'triable issues' to determine whether the insolvency proceedings should be stayed or dismissed.
- Category: Procedural
- Sub-Issues:
- Triable Issues
- Summary Judgment Test
8. Remedies Sought
- Winding Up Order
- Bankruptcy Order
- Monetary Payment
9. Cause of Actions
- Breach of Guarantee
- Winding Up
- Bankruptcy
10. Practice Areas
- Insolvency Litigation
- Commercial Litigation
11. Industries
- Petroleum
- Shipping
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Pacific Recreation Pte Ltd v S Y Technology Inc | Court of Appeal | Yes | [2008] 2 SLR(R) 491 | Singapore | Cited for the principle that the standard for resisting a winding-up application is no more than that for resisting a summary judgment application. |
| Wee Soon Kim Anthony v Lim Chor Pee | High Court | Yes | [2006] 2 SLR(R) 370 | Singapore | Cited for the interpretation of 'substantial dispute' in the context of setting aside a statutory demand in bankruptcy proceedings. |
| Wong Kwei Cheong v ABN-AMRO Bank NV | Court of Appeal | No | [2002] 2 SLR(R) 31 | Singapore | Cited for the interpretation of Rule 98(2)(b) of the Bankruptcy Rules regarding the court's obligation to set aside a statutory demand if the debt is disputed on substantial grounds; distinguished regarding the mandatory nature of dismissal. |
| Cheong Seok Leng v Public Prosecutor | High Court | Yes | [1988] 1 SLR(R) 530 | Singapore | Cited for the principle that 'shall' in a legislative provision does not necessarily mean that the provision is mandatory. |
| Lee Kiang Leng Stanley v Lee Han Chew (trading as Joe Li Electrical Supplies) | High Court | No | [2004] 3 SLR(R) 603 | Singapore | Cited regarding the court's general powers to stay bankruptcy applications; distinguished regarding the specific obligations to dismiss applications where a substantial debt dispute exists. |
| Abdul Salam Asanaru Pillai (trading as South Kerala Cashew Exporters) v Nomanbhoy & Sons Pte Ltd | High Court | Yes | [2007] 2 SLR(R) 856 | Singapore | Cited for the principle that the commercial sense of a commercial arrangement is a factor in deciding whether to impose conditions on leave to defend. |
| M V Yorke Motors v Edwards | Court of Appeal | Yes | [1982] 1 WLR 444 | England and Wales | Cited for the principle that it is wrong in principle to make an order conditional on a defendant furnishing security in an amount which it would find impossible to provide. |
| Lim Leong Huat v Chip Hup Hup Kee Construction Pte Ltd | High Court | Yes | [2008] 2 SLR(R) 786 | Singapore | Cited for the principle that the full sum of the claim will ordinarily be the starting point for the security to be furnished when imposing a condition on a defendant's ability to resist an insolvency application or summary judgment. |
| Gao Bin v OCBC Securities Pte Ltd | High Court | Yes | [2009] 1 SLR(R) 500 | Singapore | Cited for the principle that the full sum of the claim will ordinarily be the starting point for the security to be furnished when imposing a condition on a defendant's ability to resist an insolvency application or summary judgment. |
| Denmark Skibstekniske Konsulenter A/S I Likvidation (formerly known as Knud E Hansen A/S) v Ultrapolis 3000 Investments Ltd (formerly known as Ultrapolis 3000 Theme Park Investments Ltd) | Court of Appeal | Yes | [2011] 4 SLR 997 | Singapore | Cited for the principle that a stay of proceedings should not be granted when a party has failed to provide security as a condition of obtaining a stay. |
| In re Calgary & Edmonton Land Co Ltd (in liquidation) | Chancery Division | Yes | [1975] 1 WLR 355 | England and Wales | Cited for the principle that the onus is on the defendant to show why it is appropriate to stay proceedings or execution of orders rather than let insolvency proceedings run their normal course. |
| In re A & B C Chewing Gum Ltd, Topps Chewing Gum Inc v Coakley and others | Chancery Division | Yes | [1975] 1 WLR 579 | England and Wales | Cited for the practice of not ordering a stay of execution of a winding up order pending an appeal against that order. |
| In the matter of BLV Realty II Limited | High Court | Yes | [2010] EWHC 1791 (Ch) | England and Wales | Cited with approval for the practice of not ordering a stay of execution of a winding up order pending an appeal against that order. |
| Society of Lloyd’s v Beaumont and other debtors | High Court | No | [2006] BPIR 1021 | England and Wales | Cited by the guarantors to support their argument that the bankruptcy proceedings or orders should be stayed pending appeal; distinguished on the facts of the case. |
13. Applicable Rules
| Rule Name |
|---|
| Bankruptcy Rules (Cap 20, R 1, 2006 Rev Ed) r 97(1) |
| Bankruptcy Rules r 98(2)(b) |
| Bankruptcy Rules r 127(b) |
| Bankruptcy Rules r 97 |
| Bankruptcy Rules r 98 |
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) O14 |
| Rules of Court order 14, r 3 |
| Bankruptcy Rules r 42(b) |
| Rules of Court O 56 r 1(4) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) s 254(2)(a) | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) s 62(a) | Singapore |
| Bankruptcy Act s 65(2)(e) | Singapore |
| Companies Act (Cap 50, Rev Ed 2006) s 257(1) | Singapore |
| Companies Act (Cap 50, Rev Ed 2006) s 257(2)(f) | Singapore |
| Bankruptcy Act s 64(1) | Singapore |
| Bankruptcy Act s 65(4) | Singapore |
| Bankruptcy Act s 65(5) | Singapore |
| Interpretation Act (Cap 1, 2002 Rev Ed) section 19(c) | Singapore |
| Bankruptcy Act s 65(5)(i) | Singapore |
| Bankruptcy Act s 123(1)(a) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Guarantee
- Insolvency
- Winding Up
- Bankruptcy
- Statutory Demand
- Misrepresentation
- Security
- Stay of Proceedings
- Triable Issue
- Guarantor
- Principal Debtor
- Corporate Guarantee
- Personal Guarantee
15.2 Keywords
- Guarantee
- Insolvency
- Bankruptcy
- Winding Up
- Misrepresentation
- Security
- Singapore
- Chimbusco
- Jalalludin
- Gas Trade
16. Subjects
- Insolvency
- Guarantees
- Commercial Law
- Civil Procedure
17. Areas of Law
- Insolvency Law
- Bankruptcy Law
- Company Law
- Guarantees
- Civil Procedure