SCK Serijadi Sdn Bhd v Artison Interior Pte Ltd: Winding Up & Stay of Proceedings
In SCK Serijadi Sdn Bhd v Artison Interior Pte Ltd, the Court of Appeal of Singapore addressed whether the service of a garnishee order nisi renders a judgment creditor a secured creditor for the purposes of obtaining leave under s 299(2) of the Companies Act in winding-up proceedings. The court dismissed the appeal, holding that the appellant was not a secured creditor and was not entitled to retain the benefit of the attachment against the liquidator pursuant to s 334(1) of the Act.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The court addressed whether a garnishee order nisi makes a judgment creditor a secured creditor in winding-up proceedings. The appeal was dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| SCK Serijadi Sdn Bhd | Appellant, Plaintiff | Corporation | Appeal Dismissed | Lost | Chia Swee Chye Kelvin |
| Artison Interior Pte Ltd | Respondent, Defendant | Corporation | Appeal Upheld | Won | A Rajandran |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Steven Chong | Judge of Appeal | Yes |
| Quentin Loh | Judge | No |
| Chao Hick Tin | Senior Judge | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chia Swee Chye Kelvin | Lumen Law Corporation |
| A Rajandran | A Rajandran |
4. Facts
- The appellant engaged the respondent to undertake interior decoration works under two subcontracts.
- The appellant sued the respondent in the District Court for the return of overpayments.
- The appellant obtained judgment against the respondent for $250,000 plus interests and costs.
- The appellant filed two garnishee applications against Shanghai Chong Kee Furniture & Construction Pte Ltd.
- The respondent company was placed under creditors’ voluntary winding up on 5 October 2017.
- The appellant filed an application to the High Court for leave to proceed with the garnishee proceedings.
5. Formal Citations
- SCK Serijadi Sdn Bhd v Artison Interior Pte Ltd, Civil Appeal No 231 of 2017, [2019] SGCA 05
6. Timeline
| Date | Event |
|---|---|
| Appellant obtained judgment against the respondent for $250,000 plus interests and costs. | |
| Appellant filed a garnishee application against Shanghai Chong Kee Furniture & Construction Pte Ltd in respect of the sum of $155,000. | |
| Appellant obtained a garnishee order nisi which it then served on Shanghai Chong Kee. | |
| Appellant filed a second garnishee application against Shanghai Chong Kee in respect of a further sum of $57,500. | |
| Appellant was granted a second garnishee order nisi which it served on Shanghai Chong Kee. | |
| Appellant’s solicitors informed the respondent’s solicitors that the show cause hearing for both the garnishee applications had been fixed on 10 October 2017. | |
| Respondent company was placed under creditors’ voluntary winding up. | |
| Judgment Date | |
| Heard Date |
7. Legal Issues
- Whether service of a garnishee order nisi renders a judgment creditor a secured creditor for the purposes of ss 299(2) and 334(1) of the Companies Act
- Outcome: The court held that the service of a garnishee order nisi does not render the judgment creditor a secured creditor.
- Category: Substantive
8. Remedies Sought
- Leave to proceed with garnishee proceedings
- To be allowed to retain the benefit of the attachment as against the liquidator
9. Cause of Actions
- Recovery of Overpayments
10. Practice Areas
- Commercial Litigation
- Insolvency Law
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Transbilt Engineering Pte Ltd (in liquidation) v Finebuild Systems Pte Ltd | Court of Appeal | Yes | [2005] 3 SLR(R) 550 | Singapore | Cited as the precedent case regarding the treatment of a judgment creditor with a garnishee order nisi as an unsecured creditor in winding-up proceedings. |
| Korea Asset Management v Daewoo Singapore Pte Ltd (in liquidation) | High Court | Yes | [2004] 1 SLR(R) 671 | Singapore | Cited for the principle that leave to proceed would readily be given to an applicant who was merely attempting to claim from the company, property which prima facie belongs to the applicant. |
| Power Knight Pte Ltd v Natural Fuel Pte Ltd (in compulsory liquidation) and others | High Court | Yes | [2010] 3 SLR 82 | Singapore | Cited for the principle that the rights of a secured creditor or in rem rights should not be fettered as a matter of course by the initiation of insolvency proceedings. |
| In re Aro Co Ltd | N/A | Yes | [1979] 2 WLR 150 | England and Wales | Cited for the principle that what is needed is not the mere initiation of the procedural steps which will lead to the creditor obtaining a security for his debt, but the actual creation of that security prior to the winding up. |
| Galbraith v Grimshaw and Baxter | N/A | Yes | [1910] 1 KB 339 | England and Wales | Cited to show that a garnishee order nisi does not operate as a transfer of the property in the debt, but is an equitable charge on it. |
| N Joachimson v Swiss Bank Corporation | N/A | Yes | [1921] 3 KB 110 | England and Wales | Cited to show that the service of the garnishee order nisi binds the debt in the hands of the garnishee and creates a charge in favor of the judgment creditor. |
| Société Eram Shipping Co Ltd v Compagnie Internationale de Navigation and others | House of Lords | Yes | [2003] 3 WLR 21 | United Kingdom | Cited to show that the first stage of garnishee proceedings takes the form of an order nisi which creates a charge on the asset to be executed against. |
| Swiss Bank Corporation v Lloyds Bank Ltd and Others | N/A | Yes | [1980] 3 WLR 457 | England and Wales | Cited to define an equitable charge as when property is expressly or constructively made liable, or specially appropriated, to the discharge of a debt or some other obligation. |
| Lyford and another v Commonwealth Bank of Australia | Federal Court of Australia | Yes | (1995) 130 ALR 267 | Australia | Cited to show the divergence in opinion on whether an equitable charge which is not an equitable mortgage confers any proprietary interest in the underlying debt. |
| Diablo Fortune Inc v Duncan, Cameron Lindsay and another | Court of Appeal | Yes | [2018] 2 SLR 129 | Singapore | Cited to show that the phrase 'proprietary interest' has different meanings in different contexts. |
| ex parte Joselyne, In re Watt | N/A | Yes | (1878) 8 Ch D 327 | England and Wales | Cited to show the incorrect view that the service of the garnishee order nisi effected a transfer of the property in the debt from the judgment debtor to the judgment creditor. |
| National Provincial and Union Bank of England v Charnley | N/A | Yes | [1924] 1 KB 431 | England and Wales | Cited to show that where in a transaction for value both parties evince an intention that property shall be made available as security for the payment of a debt, and that the creditor shall have a present right to have it made available, there is a charge. |
| Re Bond Worth Ltd | N/A | Yes | [1980] Ch 228 | England and Wales | Cited to show that any contract which, by way of security for the payment of a debt, confers an interest in property defeasible or destructible upon payment of such debt, or appropriates such property for the discharge of the debt, must necessarily be regarded as creating a mortgage or charge. |
| Choice Investments Ltd v Jeromnimon (Midland Bank Ltd, garnishee) | N/A | Yes | [1981] 2 WLR 80 | England and Wales | Cited to show that a garnishee order nisi is an order upon the garnishee to pay the debt which it owes to the judgment debtor to the judgment creditor or into court within a stated time, unless there is some sufficient reason why the garnishee should not do so. |
| William Henry Rogers and Maria Henrietta Riches, trading as Rogers & Son v William Whiteley | N/A | Yes | [1892] AC 118 | England and Wales | Cited to show that if the garnishee pays the sum to the judgment debtor in breach of the garnishee order, he does so at his own peril, and bears the risk of being held liable to pay the same amount to the judgment creditor. |
| Telecom Credit Inc v Midas United Group Ltd | Court of Appeal | Yes | [2018] SGCA 73 | Singapore | Cited to show that if the garnishee pays the sum to the judgment debtor in breach of the garnishee order, he does so at his own peril, and bears the risk of being held liable to pay the same amount to the judgment creditor. |
| Re Grosvenor Metal Co, Ltd | N/A | Yes | [1949] 2 All ER 948 | England and Wales | Cited as an example of inequity where execution had been stalled by representations expressly made by the judgment debtor. |
| Re Tiong Polestar Engineering Pte Ltd (formerly known as Polestar Engineering (S) Pte Ltd) | N/A | Yes | [2003] 4 SLR(R) 1 | Singapore | Cited to show that the fact that the delay in receiving payment was caused by bank who was unrelated to the parties, was not a sufficient reason to set aside the rights conferred on the liquidator under s 334(1). |
| SCK Serijadi Sdn Bhd v Artison Interior Pte Ltd | District Court | Yes | [2017] SGDC 178 | Singapore | Cited for background facts of the case. |
| SCK Serijadi Sdn Bhd v Artison Interior Pte Ltd | High Court | Yes | [2018] SGHC 08 | Singapore | Cited for the Judge's grounds of decision. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Garnishee order nisi
- Winding up
- Secured creditor
- Equitable charge
- Attachment
- Liquidator
- Stay of proceedings
15.2 Keywords
- garnishee order
- winding up
- secured creditor
- insolvency
- Companies Act
16. Subjects
- Insolvency
- Garnishee Proceedings
- Civil Procedure
17. Areas of Law
- Insolvency Law
- Winding Up
- Civil Procedure