Goh Eck Hong v Tan Boon Kian: Avoidance of Undervalue Transactions & Unfair Preferences
In Goh Eck Hong v Tan Boon Kian, the General Division of the High Court of Singapore addressed an application by the Private Trustee in bankruptcy of Tan Boon Kian to declare certain transfers of money to Tan Boon Kian's family members (Tan Boon Hock, Tan Poh Swan, and Tan Seo Teng Felicia) void as either transactions at an undervalue or unfair preferences under the Bankruptcy Act. The court, presided over by Justice Tan Siong Thye, found that Tan Boon Kian was insolvent at the time of the transfers, the transfers to Tan Boon Hock and Tan Poh Swan were unfair preferences, and the transfers to Tan Seo Teng Felicia were transactions at an undervalue. The court ordered the family members to transfer the sums received to the Private Trustee.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
The Private Trustee's application is granted. TBH is ordered to transfer S$150,000, TPS S$250,000, and FT S$100,000 to the Private Trustee within 14 days.
1.3 Case Type
Insolvency
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment on avoidance of transactions at an undervalue and unfair preferences under the Bankruptcy Act involving transfers to family members.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Goh Eck Hong | Plaintiff | Individual | Neutral | Neutral | |
| Tan Boon Kian | Defendant, Respondent | Individual | Lost | Lost | |
| Hamish Alexander Christie | Applicant | Individual | Won | Won | |
| Tan Boon Hock | Respondent | Individual | Lost | Lost | |
| Tan Poh Swan | Respondent | Individual | Lost | Lost | |
| Tan Seo Teng Felicia | Respondent | Individual | Lost | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tan Siong Thye | Judge of the High Court | Yes |
4. Counsels
4. Facts
- Tan Boon Kian was declared bankrupt on 19 April 2018.
- In the two years before the bankruptcy application, Tan Boon Kian transferred substantial sums to his family members.
- On 18 January 2017, Tan Boon Kian transferred S$250,000 to his sister, Tan Poh Swan.
- On 18 January 2017, Tan Boon Kian transferred S$150,000 to his brother, Tan Boon Hock.
- On 1 November 2016 and 25 January 2017, Tan Boon Kian transferred S$100,000 to his daughter, Tan Seo Teng Felicia.
- The S$100,000 transferred to Tan Seo Teng Felicia was used for her wedding banquet.
- Hamish Alexander Christie was appointed as the trustee of Tan Boon Kian’s bankruptcy estate.
5. Formal Citations
- Christie, Hamish Alexander (as private trustee in bankruptcy of Tan Boon Kian)vTan Boon Kian and others, Bankruptcy No 533 of 2018 (Summons No 5249 of 2020), [2021] SGHC 62
6. Timeline
| Date | Event |
|---|---|
| Bankrupt transferred S$50,000 to FT | |
| FT's wedding banquet at the Ritz-Carlton hotel | |
| Bankrupt transferred S$250,000 to TPS | |
| Bankrupt transferred S$150,000 to TBH | |
| Bankrupt transferred S$50,000 to FT | |
| Bankruptcy application filed against Bankrupt | |
| Allen & Gledhill LLP sent letter of demand to Bankrupt | |
| Ocean Drive Property sold by Bankrupt’s ex-wife | |
| Treasure Resort went into liquidation | |
| Bankrupt declared bankrupt | |
| Hamish Alexander Christie appointed as the trustee of the Bankrupt’s bankruptcy estate | |
| Judgment reserved | |
| Judgment issued |
7. Legal Issues
- Insolvency
- Outcome: The court found that the Bankrupt was insolvent at the time of the Transfers, satisfying both the cash flow and balance sheet tests.
- Category: Substantive
- Sub-Issues:
- Cash flow insolvency
- Balance sheet insolvency
- Related Cases:
- [2017] SGHC 15
- [2016] 3 SLR 621
- [2016] SGHC 231
- Unfair Preference
- Outcome: The court found that the transfers to TPS and TBH were unfair preferences and that the Bankrupt was influenced by a desire to prefer them.
- Category: Substantive
- Sub-Issues:
- Desire to prefer
- Associate of the individual
- Related Cases:
- [2010] 4 SLR 1089
- [2011] 4 SLR 948
- [2011] 4 SLR 977
- Transaction at an Undervalue
- Outcome: The court found that the transfers to FT were transactions at an undervalue.
- Category: Substantive
- Sub-Issues:
- Gifts
- No consideration
- Related Cases:
- [2011] All ER (D) 27 (Aug)
- [2020] All ER (D) 153 (May)
- Court's Discretion
- Outcome: The court declined to exercise its discretion under s 98(2) of the Act not to make an order restoring the position to what it would have been if the Bankrupt had not entered into the transactions with FT.
- Category: Procedural
- Sub-Issues:
- Restoring the position
- Exceptional circumstances
- Related Cases:
- [2016] 3 SLR 621
8. Remedies Sought
- Declarations that the Transfers are void under ss 98 and/or 99 of the Bankruptcy Act
- Orders for each of the Recipients to transfer the sums received to the Private Trustee
9. Cause of Actions
- Avoidance of transactions at an undervalue
- Avoidance of unfair preferences
10. Practice Areas
- Insolvency Litigation
- Bankruptcy Litigation
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan and others | High Court | Yes | [2017] SGHC 15 | Singapore | Cited for the application of the cash flow and balance sheet tests for insolvency. |
| Living the Link Pte Ltd (in creditors’ voluntary liquidation) and others v Tan Lay Tin Tina and others | High Court | Yes | [2016] 3 SLR 621 | Singapore | Cited for the disjunctive application of the cash flow and balance sheet tests for insolvency and for the requirements for establishing cash flow insolvency. |
| CCM Industrial Pte Ltd (in liquidation) v Chan Pui Yee | High Court | Yes | [2016] SGHC 231 | Singapore | Cited for the disjunctive application of the cash flow and balance sheet tests for insolvency. |
| Seah Chee Wan and another v Connectus Group Pte Ltd | High Court | Yes | [2019] SGHC 228 | Singapore | Cited regarding the need for a demand or request for payment to establish cash flow insolvency. |
| Leun Wah Electric Co (Pte) Ltd (in liquidation) v Sigma Cable Co (Pte) Ltd | High Court | Yes | [2006] 3 SLR(R) 227 | Singapore | Cited for the principle that cash flow insolvency is established if the individual was pressed for payments at the material time and had not been able to pay. |
| Kon Yin Tong and another v Leow Boon Cher and others | High Court | Yes | [2011] SGHC 228 | Singapore | Cited for the definition of a prospective liability in the context of the balance sheet test for insolvency. |
| Liquidators of Progen Engineering Pte Ltd v Progen Holdings Ltd | Court of Appeal | Yes | [2010] 4 SLR 1089 | Singapore | Cited for the principle that to rebut the presumption of a desire to prefer, the transfers must not be influenced at all by any desire to place the recipient in a preferential position. |
| DBS Bank Ltd v Tam Chee Chong and another (judicial managers of Jurong Hi-Tech Industries Pte Ltd (under judicial management)) | Court of Appeal | Yes | [2011] 4 SLR 948 | Singapore | Cited for the principle that the desire to prefer may be proved by direct evidence or inferred from the circumstances, and for the relevance of the debtor's subjective desire to improve the creditor's position. |
| 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 principle that the desire to prefer relates to producing the effect of a preference and has nothing to do with knowledge of one’s own insolvency. |
| Trustee in Bankruptcy of Gordon Robin Claridge v Claridge and another | English Court | Yes | [2011] All ER (D) 27 (Aug) | England | Discussed regarding the court's discretion not to make an order restoring the position in undervalue transactions, but distinguished on its facts. |
| Re Peter Herbert Fowlds (a bankrupt) Bucknall and another (as joint trustees in bankruptcy of Peter Herbert Fowlds) v Wilson | English Court | Yes | [2020] All ER (D) 153 (May) | England | Discussed regarding the court's discretion not to make an order restoring the position in unfair preference cases, but distinguished on its facts. |
| Buildspeed Construction Pte Ltd (in liquidation) v Theme Corp Pte Ltd and another | High Court | Yes | [2000] 1 SLR(R) 287 | Singapore | Cited to highlight that the current Bankruptcy Act does not refer to undervalue transactions or unfair preferences being void or voidable. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Bankruptcy Act (Cap 20) | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) s 98 | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) s 99 | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) s 100 | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) s 101 | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) s 102 | Singapore |
| Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) ss 361–365 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Bankruptcy
- Insolvency
- Unfair preference
- Transaction at undervalue
- Private Trustee
- Clawback period
- Cash flow test
- Balance sheet test
- Desire to prefer
- Associates
- Contingent liabilities
15.2 Keywords
- Bankruptcy
- Insolvency
- Unfair preference
- Transaction at undervalue
- Singapore
- Bankruptcy Act
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Insolvency Law | 95 |
| Unfair preferences | 90 |
| Avoidance of transfer | 90 |
| Transactions at an undervalue | 90 |
| Bankruptcy | 80 |
| Judgments and Orders | 50 |
| Civil Procedure | 30 |
16. Subjects
- Bankruptcy
- Insolvency
- Transactions at an undervalue
- Unfair preferences