Zhang Hong En Jonathan v Private Trustee: Bankruptcy, Trustee's Sanction & Judicial Review

In Zhang Hong En Jonathan v Private Trustee in Bankruptcy of Zhang Hong’En Jonathan, the High Court of Singapore heard an application by Zhang Hong En Jonathan, a bankrupt, to reverse the decision of his private trustee in bankruptcy to revoke sanction for him to defend third-party proceedings. Aedit Abdullah J dismissed the application, holding that the court should defer to the trustee's decision unless it is so perverse that no reasonable trustee would have come to the same conclusion, and that the trustee's decision in this case was not indefensible.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Application dismissed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

A bankrupt sought court review of a trustee's decision to revoke sanction for defending third-party proceedings. The court dismissed the application, deferring to the trustee's judgment.

1.7 Decision Date

1 December 2020

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Zhang Hong En Jonathan	Applicant	Individual	Application Dismissed	Lost	Lee Ee Yang of Covenant Chambers LLC Chin Yen Bing Arthur of Covenant Chambers LLC Eoon Zizhen, Benedict (Wen Zizhen) of Covenant Chambers LLC
Private Trustee in Bankruptcy of the estate of Zhang Hong’En Jonathan	Respondent	Other	Decision Upheld	Won	Koh Yeong Hung Sasha of Adsan Law LLC

3. Judges

Judge Name	Title	Delivered Judgment
Aedit Abdullah	Judge	Yes

4. Counsels

Counsel Name	Organization
Lee Ee Yang	Covenant Chambers LLC
Chin Yen Bing Arthur	Covenant Chambers LLC
Eoon Zizhen, Benedict (Wen Zizhen)	Covenant Chambers LLC
Koh Yeong Hung Sasha	Adsan Law LLC

4. Facts

The Applicant was made bankrupt on 1 November 2018.
The Applicant sought sanction from the Private Trustee to defend third-party proceedings.
The Private Trustee initially granted sanction but later revoked it, imposing additional conditions.
The Applicant argued the additional conditions were unduly onerous.
The Private Trustee argued there is an absolute bar on the bankrupt defending legal actions without sanction.
The Private Trustee was concerned about potential criminal liability and adverse cost orders.
The Applicant's father was initially supposed to cover legal costs but was later deemed impecunious.

5. Formal Citations

Zhang Hong En Jonathan v Private Trustee in Bankruptcy of Zhang Hong’En Jonathan, Originating Summons No 779 of 2020, [2020] SGHC 262

6. Timeline

Date	Event
2018-11-01	Bankruptcy Order made against the Applicant.
2020-05-05	Private Trustee initially granted sanction to defend third-party proceedings.
2020-06-01	Private Trustee revoked sanction, imposing additional conditions.
2020-09-17	Hearing held.
2020-12-02	Judgment reserved.

7. Legal Issues

Review of Trustee's Decision
- Outcome: The court held that the appropriate standard of review is one of deference to the trustee's decision, unless it is so perverse that no reasonable trustee would have come to the same conclusion.
- Category: Procedural
- Sub-Issues:
  - Standard of review for trustee's decisions
  - Balancing interests of bankrupt and creditors
Sanction to Defend Legal Action
- Outcome: The court held that the private trustee has the power to impose conditions for granting sanction and to revoke sanction if those conditions are not met.
- Category: Substantive
- Sub-Issues:
  - Conditions for granting sanction
  - Revocation of sanction

8. Remedies Sought

Reversal of Private Trustee's decision
Direction to sanction the defence of proceedings

9. Cause of Actions

Review of Trustee's Decision

10. Practice Areas

Bankruptcy Law
Commercial Litigation

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Associated Provincial Picture Houses Ltd v Wednesbury Corpn	N/A	Yes	[1948] 1 KB 223	England	Cited regarding the standard of irrationality or Wednesbury unreasonableness in judicial review.
Singapore Telecommunications Ltd v Official Assignee	High Court	Yes	[2001] 2 SLR(R) 525	Singapore	Cited regarding the private trustee stepping into the shoes of the Applicant in the suit.
Standard Chartered Bank v Loh Chong Yong Thomas	Court of Appeal	Yes	[2010] 2 SLR 569	Singapore	Cited as authority for the absolute bar under s 131(1)(a) of the Bankruptcy Act on the bankrupt commencing, continuing, or defending legal actions.
Tan King Hiang v United Engineers (Singapore) Pte Ltd	High Court	Yes	[2005] 3 SLR(R) 529	Singapore	Cited as an example of an instance where the Official Assignee had revoked previously-granted sanction when the bankrupt failed to fulfil conditions which had been subsequently imposed.
Ong Eng Kae and another v Rupesh Kumar and others	High Court	Yes	[2015] SGHC 163	Singapore	Cited as examples illustrating the breadth of the private trustee’s power and discretion under s 131 of the Bankruptcy Act.
Tan Cheng Bock v Attorney-General	Court of Appeal	Yes	[2017] 2 SLR 850	Singapore	Cited regarding according primacy to the text of the provision and its statutory context over any extraneous material in seeking to draw out the legislative purpose behind a provision.
Ng Chye Huey v Public Prosecutor	Court of Appeal	Yes	[2007] 2 SLR(R) 106	Singapore	Cited regarding the term ‘review’ sometimes denoting the exercise of the Court’s supervisory jurisdiction.
Public Prosecutor v S M Sukhmit Singh	District Court	Yes	[2008] SGDC 197	Singapore	Cited regarding prosecution under the Bankruptcy Act, specifically for leaving the country without the Official Assignee’s permission.
Chee Soon Juan v Public Prosecutor	High Court	Yes	[2007] SGHC 155	Singapore	Cited regarding a Magistrate’s Appeal case.
Macchia v Nilant	Federal Court	Yes	(2001) 110 FCR 101; [2001] FCA 7	Australia	Surveyed a range of authorities on when a court would intervene in the decisions of a trustee in bankruptcy.
Re Peters; Ex parte Lloyd	N/A	Yes	(1882) 47 LT 64	England	Cited regarding the requirement before a court would interfere with the trustee’s discretion was for the trustee to be acting in a way that was “so utterly unreasonable and absurd that no reasonable man could so act”.
Cummings v Claremont Petroleum NL	High Court of Australia	Yes	(1996) 185 CLR 124	Australia	Cited stating that s 178 of the Australian Bankruptcy Act 1966 conferred a “supervisory jurisdiction over the conduct of the trustee”.
Moore v Macks	Federal Court	Yes	[2007] FCA 10	Australia	Cited regarding the supervisory role the court undertakes in the exercise of its powers under s 178 of the Australian Bankruptcy Act 1966.
Young v Thomson	Full Court of the Federal Court of Australia	Yes	(2017) 253 FCR 191; [2017] FCAFC 140	Australia	Cited regarding the discretion conferred under s 178(1) of the Australian Bankruptcy Act 1966 is broad and must be exercised in the particular circumstances of each case.
Bramston v Haut	N/A	Yes	[2013] WLR 1720	England	The current leading authority on the application of s 303 of the IA 1986, which adopts a perversity approach in reviewing a trustee in bankruptcy’s decisions.
Mikki v Duncan	N/A	Yes	[2017] 1 WLR 2907	England	Followed Bramston v Haut.
Re Edennote Ltd; Tottenham Hotspur plc and others v Ryman and another	N/A	Yes	[1996] 2 BCLC 389	England	Cited regarding it being confusing to introduce language concerned with the control of administrative action into the court’s control of the acts and decisions of liquidators.
re A Debtor; Ex p The Debtor v Dodwell	N/A	Yes	[1949] Ch 236	England	Cited regarding administration would be impossible if the trustee had to answer at every step to the bankrupt for the exercise of his powers and discretions in the management of and realisation of the property.
Osborne v Cole	N/A	Yes	[1999] BPIR 251	England	Cited regarding it only being right for the court to interfere with the decision the official receiver has taken if it can be shown that he has acted in bad faith or so perversely that no trustee properly advised or properly instructing himself could so have acted, alternatively if he has acted fraudulently or in a manner so unreasonable and absurd that no reasonable person would have acted in that way.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Insolvency, Restructuring and Dissolution Act (No 40 of 2018)	Singapore
Bankruptcy Act (Cap 20, 2009 Rev Ed)	Singapore
Bankruptcy Act (Cap 20, 2009 Rev Ed)	Singapore
Australian Bankruptcy Act 1966 (Cth)	Australia
Insolvency Act 1986 (c 45) (UK)	United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

Bankruptcy
Private Trustee
Sanction
Third-party proceedings
Wednesbury unreasonableness
Perversity standard
Security deposit
Insolvency
Creditors
Estate

15.2 Keywords

Bankruptcy
Trustee
Sanction
Judicial Review
Insolvency

17. Areas of Law

Area Name	Relevance Score
Bankruptcy	95
Insolvency Law	95
Jurisdiction	30
Civil Procedure	20
Trust Law	15

16. Subjects

Bankruptcy Law
Insolvency Law
Trusteeship
Judicial Review