Founder Group v Singapore JHC: Winding Up, Disputed Debt & Arbitration
The Court of Appeal allowed the appeal by Founder Group (Hong Kong) Limited (in liquidation) against the decision of the High Court dismissing its application to wind up Singapore JHC Co Pte Ltd. The Court found that Founder Group had the requisite standing as a creditor, the debt was not genuinely disputed, and Singapore JHC was insolvent. The court ordered that Singapore JHC be wound up.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal allowed, ordering Singapore JHC to be wound up. The court found Founder Group had standing as a creditor, the debt was not genuinely disputed, and JHC was insolvent.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Founder Group (Hong Kong) Limited (in liquidation) | Appellant, Claimant | Corporation | Appeal Allowed | Won | |
| Singapore JHC Co Pte Ltd | Respondent, Defendant | Corporation | Winding Up Ordered | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | Yes |
| Steven Chong | Justice of the Court of Appeal | No |
| Kannan Ramesh | Judge of the Appellate Division | No |
4. Counsels
4. Facts
- FGHK claimed to be a creditor of JHC in a sum of around US$47.43m.
- The sum pertained to an alleged sale of copper cathodes by FGHK to JHC pursuant to three contracts.
- Each of the Contracts stated that any disputes would be submitted to CIETAC for arbitration in Beijing.
- The Liquidators issued a statutory demand to JHC for the same sum.
- JHC disputed the debt of US$47.43m, claiming that the payment obligations were not meant to be enforced.
- JHC claimed that no copper cathodes had in fact been delivered under the Contracts.
- JHC's external auditors had issued an audit confirmation request to FGHK stating that JHC's books reflected a sum of US$47.43m that was owed to FGHK.
5. Formal Citations
- Founder Group (Hong Kong) Ltd (in liquidation) v Singapore JHC Co Pte Ltd, Civil Appeal No 41 of 2022, [2023] SGCA 40
6. Timeline
| Date | Event |
|---|---|
| First contract signed between FGHK and JHC | |
| Second contract signed between FGHK and JHC | |
| Third contract signed between FGHK and JHC | |
| JHC's external auditors issued FY2018 Audit Confirmation Request to FGHK | |
| Creditor of PUFG commenced reorganisation proceedings against it | |
| PUFG's creditors consented to a reorganisation plan | |
| Reorganisation plan approved by the Beijing First Intermediate People’s Court | |
| FGHK ordered to be liquidated by the Hong Kong Court of First Instance | |
| Liquidators of FGHK were appointed | |
| Liquidators issued a letter of demand to JHC demanding payment of US$47.43m | |
| Liquidators issued a statutory demand to JHC for US$47.43m | |
| Negotiations between parties to settle outstanding debts commenced | |
| Negotiations between parties to settle outstanding debts concluded without agreement | |
| Liquidators filed HC/CWU 121/2022 seeking an order that JHC be wound up | |
| Judge dismissed CWU 121 | |
| Court of Appeal heard the appeal | |
| Court of Appeal allowed the appeal and ordered that JHC be wound up |
7. Legal Issues
- Standing to bring a winding-up application
- Outcome: The Court found that Founder Group had the requisite standing as a creditor to bring a winding-up application.
- Category: Procedural
- Sub-Issues:
- Contingent creditor
- Disputed debt
- Abuse of process
- Whether a dispute over a debt should be referred to arbitration
- Outcome: The Court found that JHC could not invoke the arbitration agreement in the present circumstances.
- Category: Substantive
- Sub-Issues:
- Separability of arbitration agreement
- Abuse of process
- Whether JHC was unable to pay its debts
- Outcome: The Court found that JHC was unable to pay its debts based on its audited financial statements.
- Category: Substantive
8. Remedies Sought
- Order that JHC be wound up
9. Cause of Actions
- Winding up
10. Practice Areas
- Commercial Litigation
- Insolvency
- Arbitration
11. Industries
- Wholesale Trade
- Metals and Metal Products
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co) | Court of Appeal | Yes | [2020] 1 SLR 1158 | Singapore | Cited for the test to be applied when a defendant disputes a debt arising under a contract containing an arbitration agreement. |
| Pacific Recreation Pte Ltd v S Y Technology Inc | Court of Appeal | Yes | [2008] 2 SLR(R) 491 | Singapore | Cited for the approach taken when a court is faced with an application for summary judgment. |
| Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals | Court of Appeal | Yes | [2016] 1 SLR 373 | Singapore | Cited for the principle that a stay will typically be granted if the court is satisfied on a prima facie basis that there is a valid arbitration agreement between the parties, and the dispute falls within the scope of that agreement. |
| Sim Chay Koon and others v NTUC Income Insurance Co-operative Ltd | Court of Appeal | Yes | [2016] 2 SLR 871 | Singapore | Cited for the principle that a stay will typically be granted if the court is satisfied on a prima facie basis that there is a valid arbitration agreement between the parties, and the dispute falls within the scope of that agreement. |
| Metalform Asia Pte Ltd v Holland Leedon Pte Ltd | Court of Appeal | Yes | [2007] 2 SLR(R) 268 | Singapore | Cited for the principle that the court will restrain a creditor from filing a petition to wind up the company, or if the petition has been filed, to stay or dismiss it on the ground that the locus standi of the petitioner as a creditor is in question, and it is an abuse of process of the court for the petitioner to try to enforce a disputed debt in this way. |
| Mann v Goldstein | Unknown | Yes | [1968] 1 WLR 1091 | England and Wales | Cited for the principle that a creditor's petition can only be presented by a creditor, and the winding-up jurisdiction is not for the purpose of deciding a disputed debt. |
| Re People’s Parkway Development Pte Ltd | High Court | Yes | [1991] 2 SLR(R) 567 | Singapore | Cited for the definition of a contingent creditor. |
| Re William Hockley Ltd | Unknown | Yes | [1962] 1 WLR 555 | England and Wales | Cited for the definition of a contingent creditor. |
| Community Development Pty Ltd v Engwirda Construction Co | High Court of Australia | Yes | (1969) 120 CLR 455 | Australia | Cited for the definition of a contingent creditor. |
| National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd | Supreme Court of Brisbane | Yes | [1983] 2 Qd R 441 | Australia | Cited as authority for its observation that in the case of a debt that is wholly, and not merely in part, disputed, the petitioner may nevertheless remain a ‘contingent creditor’. |
| RCMA Asia Pte Ltd v Sun Electric Power Pte Ltd (Energy Market Authority of Singapore, non-party) | High Court | Yes | [2020] SGHC 205 | Singapore | Cited for the proposition that a claimant of a debt that was disputed may nonetheless be considered to be a contingent creditor. The Court of Appeal disagreed with the observations in this case. |
| Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd (formerly known as Tong Teik Pte Ltd) | Court of Appeal | Yes | [2021] 2 SLR 478 | Singapore | Cited to show that the question of RCMA’s standing was not before this court because the parties did not dispute it. |
| SAAG Oilfield Engineering (S) Pte Ltd (formerly known as Derrick Services Singapore Pte Ltd) v Shaik Abu Bakar bin Abdul Sukol and another and another appeal | Court of Appeal | Yes | [2012] 2 SLR 189 | Singapore | Cited for the principle that the term “creditors” under s 210 of the Companies Act (Cap 50, 2006 Rev Ed) included persons with unproven tort claims for an unliquidated sum. |
| Marty Ltd v Hualon Corp (Malaysia) Sdn Bhd (receiver and manager appointed) | Court of Appeal | Yes | [2018] 2 SLR 1207 | Singapore | Cited for the principle that separability does not shield an arbitration clause from a challenge that affects the underlying contract as a whole. |
| Fiona Trust & Holding Corporation and others v Privalov and others | House of Lords | Yes | [2007] 4 All ER 951 | England and Wales | Cited for the principle that notwithstanding the principle of separability, there will be circumstances where an attack on the main agreement is an attack on the validity of the arbitration agreement as well. |
| BWG v BWF | Court of Appeal | Yes | [2020] 1 SLR 1296 | Singapore | Cited for the principle that an abuse of process may arise where the debtor adopts an inconsistent position in the same or related proceedings, in the absence of a clear and convincing reason to do so. |
| BCY v BCZ | High Court | Yes | [2017] 3 SLR 357 | Singapore | Cited for the principle that the implied choice of law for the arbitration agreement is likely to be the same as the expressly chosen law of the substantive contract, unless there are clear indications to the contrary. |
| Anupam Mittal v Westbridge Ventures II Investment Holdings | Court of Appeal | Yes | [2023] 1 SLR 349 | Singapore | Cited for the principle that the implied choice of law for the arbitration agreement is likely to be the same as the expressly chosen law of the substantive contract, unless there are clear indications to the contrary. |
| DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd and another appeal | Court of Appeal | Yes | [2010] 3 SLR 542 | Singapore | Cited for the principle that the court has a general power to award costs against non-parties under the previous O 59 r 2(2) of the Rules of Court (2014 Rev Ed). |
| SIC College of Business and Technology Pte Ltd v Yeo Poh Siah and others | Court of Appeal | Yes | [2016] 2 SLR 118 | Singapore | Cited for the principles regarding cost orders sought against directors and shareholders of litigant companies. |
| Founder Group (Hong Kong) Ltd (in liquidation) v Singapore JHC Co Pte Ltd | High Court | Yes | [2023] SGHC 159 | Singapore | The decision of the High Court that was appealed against in this case. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court 2021 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Winding up
- Disputed debt
- Arbitration agreement
- Contingent creditor
- Abuse of process
- Copper cathodes
- Audit confirmation request
- Liquidators
- Insolvency
- Separability
15.2 Keywords
- Winding up
- Insolvency
- Arbitration
- Disputed debt
- Singapore
- Founder Group
- Singapore JHC
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Winding Up | 95 |
| Insolvency Law | 90 |
| Arbitration | 70 |
| Bankruptcy | 60 |
| Company Law | 50 |
| Contract Law | 30 |
| Commercial Disputes | 25 |
16. Subjects
- Insolvency
- Arbitration
- Contract Law