Wang Aifeng v Sunmax Global Capital: Permission to Continue Proceedings Against Bankrupt Director
In Wang Aifeng v Sunmax Global Capital Fund 1 Pte Ltd and Li Hua, the General Division of the High Court of Singapore granted Mr. Wang Aifeng permission to continue proceedings in Suit 1175 of 2019 against Mr. Li Hua, the second defendant, who had been declared bankrupt. The claim is based on alleged misrepresentations made by Mr. Li inducing Mr. Wang to invest $1,500,000 in Sunmax Global Capital Fund 1 Pte Ltd. The court, presided over by Goh Yihan JC, considered factors under s 327(1)(c) of the Insolvency, Restructuring and Dissolution Act 2018, including the timing of the application, the nature of the claim, and the potential prejudice to creditors.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Permission granted to the plaintiff to continue proceedings against the second defendant.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court grants permission to continue proceedings against a bankrupt director for alleged misrepresentations inducing investment. The decision clarifies factors for granting such permission.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Li Hua | Defendant | Individual | Permission to continue proceedings granted | Lost | |
| Wang Aifeng | Plaintiff, Applicant | Individual | Application Granted | Won | |
| Sunmax Global Capital Fund 1 Pte Ltd | Defendant | Corporation | Winding up order | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Goh Yihan | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Aw Wen Ni | WongPartnership LLP |
| Poon Chun Wai | WongPartnership LLP |
4. Facts
- Plaintiff invested $1,500,000 in the first defendant based on representations by the second defendant.
- The second defendant allegedly represented that the investment would be principal-guaranteed.
- The plaintiff did not receive the promised investment returns.
- The plaintiff commenced Suit 1175 against the defendants for misrepresentation and/or unlawful means conspiracy.
- The second defendant filed a bankruptcy application and was declared bankrupt.
- The plaintiff sought permission to continue proceedings against the second defendant under s 327(1)(c) of the IRDA.
5. Formal Citations
- Wang Aifeng v Sunmax Global Capital Fund 1 Pte Ltd and another, Suit No 1175 of 2019 (Summons No 2752 of 2022), [2022] SGHC 271
- Song Jianbo v Sunmax Global Capital Fund 1 Pte Ltd, , [2022] SGHC 229
6. Timeline
| Date | Event |
|---|---|
| Plaintiff invested $1,500,000 in the first defendant. | |
| Suit 1175 commenced against the first defendant. | |
| Mr. Li was added as the second defendant. | |
| Parties were ready for trial. | |
| Assistant Registrar directed parties to exchange affidavits of evidence-in-chief. | |
| Second defendant filed a debtor’s bankruptcy application. | |
| Judgment creditor filed an application to wind up the first defendant. | |
| Second defendant was declared bankrupt. | |
| Mr. Farooq Mann appointed as the private trustee in bankruptcy of the second defendant. | |
| Court ordered the first defendant to be wound up. | |
| Hearing date. | |
| Judgment date. |
7. Legal Issues
- Permission to continue proceedings against a bankrupt
- Outcome: The court granted permission to the plaintiff to continue proceedings against the second defendant.
- Category: Procedural
- Misrepresentation
- Outcome: The court considered the nature of the claim in misrepresentation when deciding whether to grant permission to continue proceedings.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Misrepresentation
- Unlawful Means Conspiracy
10. Practice Areas
- Bankruptcy
- Commercial Litigation
11. Industries
- Finance
- Investment
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ong Jane Rebecca v Lim Lie Hoa and other appeals and other matters | Court of Appeal | Yes | [2021] 2 SLR 584 | Singapore | Cited for the rationale behind s 327(1)(c) of the IRDA, which is to prevent a scramble of creditors and uphold the pari passu principle. |
| Overseas Union Bank v Lew Keh Lam | Court of Appeal | Yes | [1998] 3 SLR(R) 219 | Singapore | Cited for the purpose of s 76(1)(c)(ii) of the Bankruptcy Act, which is to prevent the liquidator’s or administrator’s task being made more difficult by a scramble among creditors. |
| Caltong (Australia) Pty Ltd (formerly known as Tong Tien See Holding (Australia) Pty Ltd) and another v Tong Tien See Construction Pte Ltd (in liquidation) and another appeal | Court of Appeal | Yes | [2002] 2 SLR(R) 94 | Singapore | Cited for the purpose of s 76(1)(c)(ii) which is to prevent the liquidators’ or administrator’s task from being made more difficult due to a scramble among creditors. |
| JA v JB | District Court | Yes | [2005] SGDC 104 | Singapore | Cited for the purpose of the bankruptcy regime in preventing a multiplicity of actions and wasting resources of the bankrupt’s estate. |
| Liu Yanzhe and another v Tan Eu Jin and others | High Court | Yes | [2019] SGHC 67 | Singapore | Cited to show the lack of local decision explaining the relevant factors a court should consider when deciding whether to grant permission for legal proceedings to proceed against a bankrupt. |
| Korea Asset Management Corp v Daewoo Singapore Pte Ltd (in liquidation) | High Court | Yes | [2004] 1 SLR(R) 671 | Singapore | Cited for the principle that the discretion has to be exercised rationally in the context of the insolvency scheme. |
| Bristol & West Building Society v Trustee of the property of Back and another (bankrupts) | English High Court | Yes | [1998] 1 BCLC 485 | United Kingdom | Cited for the principles to guide the exercise of discretion in determining whether leave should be granted under s 285(3) of the UK Insolvency Act. |
| Re Richard Clive Hallows Gallagher v Hallows Associates (a firm no longer trading) | English decision | Yes | [2020] Lexis Citation 267 | United Kingdom | Cited for endorsing the non-exhaustive list of factors espoused in Bristol & West Building without modification. |
| Avonwick Holdings Ltd v Castle Investment Fund Ltd | English decision | Yes | [2015] EWHC 3832 (Ch) | United Kingdom | Cited for endorsing the non-exhaustive list of factors espoused in Bristol & West Building without modification. |
| Re Breytenbach | English Bankruptcy High Court | Yes | [2011] Lexis Citation 109 | United Kingdom | Cited for endorsing the non-exhaustive list of factors espoused in Bristol & West Building without modification. |
| Gertig v Davies | Supreme Court of South Australia | Yes | (2003) 85 SASR 226 | Australia | Cited for the principle that s 58(3) of the Australian Bankruptcy Act protects a bankrupt and the property of the bankrupt against the enforcement of remedies. |
| 7Steel Building Solutions Pty Ltd v Wright | Federal Court of Australia | Yes | [2011] FCA 328 | Australia | Cited for the policy purpose behind s 58(3) of the Australian Bankruptcy Act, which is to relieve the trustee and the estate of the costs and time in defending legal proceedings. |
| Stojanovski v Stojanovski | Federal Court of Australia | Yes | [2018] FCA 580 | Australia | Cited for the principle that relevant to the exercise of the discretion conferred is whether the proposed claims are complex (both factually and legally) and whether it may be preferable for those issues to be resolved at a hearing rather than by way of a proof of debt. |
| Macquarie Bank Limited v Bardetta | Federal Court of Australia | Yes | [2005] FCA 507 | Australia | Cited for the principle that the court will consider whether the bankrupt’s estate will suffer financially in any way if leave is granted. |
| Armstrong Scalisi Holdings Pty Ltd v Gioiello | Federal Court of Australia | Yes | [2018] FCA 1729 | Australia | Cited for the principle that the presence of any delay in the applicant seeking leave is relevant, though the court will also consider what the prejudice caused to any party by reason of the delay is. |
| Cassegrain v Gerard Cassegrain & Co Pty Ltd (in liq) | New South Wales Court of Appeal | Yes | [2012] NSWCA 435 | Australia | Cited for the relevant factors to be considered also include the amount and seriousness of the claims; the degree and complexity of the legal and factual issues involved; the stage to which the proceedings, if commenced, have progressed; the risk that the same issues would be relitigated if the claims were to be the subject of a proof of debt; whether the claim has arguable merit; whether proceedings are already in motion at the time of liquidation; whether the proceedings will result in prejudice to creditors; whether the claim is in the nature of a test case for the interest of a large class of potential claimants; whether the grant of leave will unleash an “avalanche of litigation”; whether the cost of the hearing will be disproportionate to the company’s resources; delay and whether pre-trial procedures such as discovery and interrogatories are likely to be required or beneficial. |
| W Y Steel Construction Pte Ltd v Tycoon Construction Pte Ltd (in liquidation) | High Court | Yes | [2016] SGHC 80 | Singapore | Cited for the principle that the timing as to when the application for permission was made could be a relevant consideration. |
| An Guang Shipping Pte Ltd (judicial managers appointed) and others v Ocean Tankers (Pte) Ltd (in liquidation) | Court of Appeal | Yes | [2022] 1 SLR 1232 | Singapore | Cited for endorsing the statement of principle in Korea Asset Management. |
| SCK Serijadi Sdn Bhd v Artison Interior Pte Ltd | Court of Appeal | Yes | [2019] 1 SLR 680 | Singapore | Cited for the principle that secured creditors who are merely attempting to claim property which prima facie belonged to them should be “readily given” permission to proceed with or commence proceedings. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) | Singapore |
| Bankruptcy Act (Cap 20, 1996 Rev Ed) | Singapore |
| Insolvency Act 1986 (c 45) | United Kingdom |
| Australian Bankruptcy Act 1966 (Cth) | Australia |
15. Key Terms and Keywords
15.1 Key Terms
- Bankruptcy
- Insolvency
- Misrepresentation
- Permission to continue proceedings
- Pari passu principle
- Proof of debt
- Trustee in bankruptcy
15.2 Keywords
- Bankruptcy
- Insolvency
- Misrepresentation
- Leave to proceed
- Singapore
- IRDA
- Director
- Investment
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Permission to continue proceedings | 80 |
| Bankruptcy | 75 |
| Misrepresentation | 60 |
| Conspiracy by Unlawful Means | 50 |
| Contract Law | 30 |
| Company Law | 25 |
| Commercial Disputes | 20 |
| Civil Procedure | 15 |
16. Subjects
- Bankruptcy
- Insolvency
- Civil Procedure