CCM Industrial Pte Ltd (in liquidation) v Chan Pui Yee: Unfair Preference Claim in Insolvency
In CCM Industrial Pte Ltd (in liquidation) v Chan Pui Yee, the High Court of Singapore heard a claim by the liquidators of CCM Industrial Pte Ltd against Mdm Chan Pui Yee for the recovery of $766,799.45 in payments made to her before the company's liquidation. The liquidators argued that these payments constituted unfair preferences under s 329 of the Companies Act read with s 99(5) of the Bankruptcy Act. Chua Lee Ming JC agreed with the liquidators and ordered Mdm Chan to repay the sum to the company, finding that the payments were indeed unfair preferences.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Liquidators sought to recover $766,799.45 in payments to Mdm Chan Pui Yee, arguing unfair preference. The court ordered repayment, finding the payments were indeed unfair preferences.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| CCM Industrial Pte Ltd (in liquidation) | Plaintiff | Corporation | Judgment for Plaintiff | Won | |
| Chan Pui Yee | Defendant | Individual | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chua Lee Ming | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- The Company was a family business in the construction industry.
- The Company suffered a net loss of approximately $21.1m in FY2013.
- The Company had a negative net asset position of approximately $7.7m at the end of FY2013.
- The Company owed the defendant $766,799.45 as of 31 December 2013.
- The Company made payments of $766,799.45 to the defendant on 14 February 2014.
- Guan Chuan applied for a winding up order against the Company on 16 April 2014.
- The Company was placed in liquidation on 4 August 2014.
5. Formal Citations
- CCM Industrial Pte Ltd (in liquidation) v Chan Pui Yee, Originating Summons No 18 of 2016, [2016] SGHC 231
6. Timeline
| Date | Event |
|---|---|
| CCM Industrial Pte Ltd founded | |
| Defendant and her brother joined the Company | |
| Lawrence appointed executive director | |
| Defendant appointed executive director | |
| Plans made for initial public offering | |
| CCMG listed and started trading | |
| Company's business deteriorated | |
| Company owed the defendant $766,799.45 | |
| Guan Chuan issued progress claim of $238,450.69 | |
| Liew stated CCM has no problems continuing as a going concern | |
| Defendant resigned as director | |
| Company received termination warning letter for the Eon Shenton Project | |
| CCMG issued letter of continuing financial support | |
| Company made payments of $766,799.45 to the defendant | |
| Company's contract terminated | |
| Guan Chuan issued statutory letter of demand | |
| CCMG issued press release | |
| Guan Chuan applied for winding up order | |
| Lawrence resigned as director of the Company | |
| CCMG entered into sale and purchase agreement to sell shares in the Company to RBB | |
| Sale to RBB completed; Company filed application for judicial management | |
| Winding up application granted; Company placed in liquidation | |
| Hearing date | |
| Judgment date |
7. Legal Issues
- Unfair Preference
- Outcome: The court held that the payments constituted unfair preferences and ordered the defendant to repay the sum to the company.
- Category: Substantive
- Related Cases:
- [2011] 2 SLR 413
- [2011] 2 SLR 310
- [2004] 1 SLR(R) 434
- [2011] SGHC 228
- [2016] 3 SLR 621
- [2004] SGHC 251
- [2011] 4 SLR 977
- [2010] 4 SLR 1089
- [2015] 4 SLR 474
- Insolvency
- Outcome: The court found that the Company was insolvent at the time the payments were made, based on both the cash flow and balance sheet tests.
- Category: Substantive
- Related Cases:
- [2011] 2 SLR 413
- [2011] 2 SLR 310
- [2004] 1 SLR(R) 434
- [2011] SGHC 228
- [2016] 3 SLR 621
- [2004] SGHC 251
- Quistclose Trust
- Outcome: The court rejected the defendant's argument that the funds used to make the payments were held under a Quistclose trust.
- Category: Substantive
- Related Cases:
- [2015] 4 SLR 474
8. Remedies Sought
- Recovery of payments amounting to $766,799.45
9. Cause of Actions
- Recovery of unfair preference
10. Practice Areas
- Insolvency Litigation
- Commercial Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Jurong Technologies Industrial Corp Ltd (under judicial management) v Coöperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International, Singapore Branch) | High Court | Yes | [2011] 2 SLR 413 | Singapore | Cited for the principle that the cash flow and balance sheet tests for insolvency are to be read disjunctively. |
| Tam Chee Chong and another v DBS Bank Ltd | Unknown | Yes | [2011] 2 SLR 310 | Singapore | Cited for the principle that the cash flow and balance sheet tests for insolvency are to be read disjunctively. |
| Chip Thye Enterprises Pte Ltd (in liquidation) v Phay Gi Mo and others | Unknown | Yes | [2004] 1 SLR(R) 434 | Singapore | Cited regarding the consideration of all relevant evidence for insolvency, but distinguished as arising in a different context. |
| Kon Yin Tong and another v Leow Boon Cher and others | High Court | Yes | [2011] SGHC 228 | Singapore | Cited regarding the consideration of all relevant evidence for insolvency, but distinguished as arising in a different context. |
| Living the Link Pte Ltd (in creditors’ voluntary liquidation) and others v Tan Lay Tin Tina and others | Unknown | Yes | [2016] 3 SLR 621 | Singapore | Cited for the principle that in the context of avoidance of transactions giving unfair preferences, it is s 100(4) of the BA that applies. |
| Velstra Pte Ltd (in compulsory winding up) v Azero Investments SA | High Court | Yes | [2004] SGHC 251 | Singapore | Cited for the principle that s 100(4) introduces two specific tests of insolvency and upon either of the tests being satisfied, the company is deemed insolvent. |
| Coöperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International, Singapore Branch) v Jurong Technologies Industrial Corp Ltd (under judicial management) | Court of Appeal | Yes | [2011] 4 SLR 977 | Singapore | Cited for the test of whether the debtor’s decision to give the preference was influenced by a desire to prefer the creditor. |
| Liquidators of Progen Engineering Pte Ltd v Progen Holdings Ltd | Unknown | Yes | [2010] 4 SLR 1089 | Singapore | Cited for the principle that to rebut the presumption under s 99(5) of the BA, the defendant had to show that the Payments were not influenced at all by any desire on the Company’s part to place her in a preferential position. |
| Attorney-General v Aljunied-Hougang-Punggol East Town Council | Unknown | Yes | [2015] 4 SLR 474 | Singapore | Cited for the principle that for a Quistclose trust, the certainties of subject matter and objects must be present. |
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, 2009 Rev Ed) | Singapore |
| Section 329 of the Companies Act | Singapore |
| Section 99(5) of the Bankruptcy Act | Singapore |
| Section 100(4) of the Bankruptcy Act | Singapore |
| Section 254(2)(e) of the Companies Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Unfair preference
- Insolvency
- Liquidation
- Claw-back period
- Cash flow test
- Balance sheet test
- Associate
- Quistclose trust
15.2 Keywords
- Insolvency
- Unfair Preference
- Winding Up
- Liquidation
- Companies Act
- Bankruptcy Act
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Insolvency Law | 95 |
| Unfair preferences | 90 |
| Liquidation | 85 |
| Avoidance of transfer | 80 |
| Company Law | 50 |
| Bankruptcy | 40 |
16. Subjects
- Insolvency
- Company Law
- Commercial Law