Kyen Resources v Feima International: Liquidators' Crossclaims & Proof of Debt
The Singapore Court of Appeal heard an appeal by Kyen Resources Pte Ltd (in compulsory liquidation) and its liquidators, Chan Kheng Tek and Goh Thien Phong, against the decision to allow Feima International (Hongkong) Ltd (in liquidation)'s proof of debt. Feima had lodged a proof of debt in Kyen’s liquidation, which the Kyen Liquidators rejected based on alleged crossclaims. The court considered whether the Kyen Liquidators were entitled to account for these crossclaims when adjudicating Feima’s proof of debt and whether res judicata applied due to related proceedings in Hong Kong. The Court of Appeal dismissed the appeal and the respondent's application to stay the appeal, finding that the Kyen Liquidators were not entitled to set-off the crossclaims and that res judicata did not apply.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal dismissed; application to stay the appeal dismissed.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal addresses whether liquidators can set-off crossclaims when rejecting proof of debt and res judicata in foreign liquidations.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Goh Thien Phong | Appellant | Individual | Appeal Dismissed | Lost | |
| Chan Kheng Tek | Appellant | Individual | Appeal Dismissed | Lost | |
| Kyen Resources Pte Ltd (in compulsory liquidation) | Appellant | Corporation | Appeal Dismissed | Lost | |
| Feima International (Hongkong) Ltd (In Liquidation) | Respondent | Corporation | Application to stay the appeal dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | No |
| Kannan Ramesh | Judge of the Appellate Division | Yes |
| Judith Prakash | Senior Judge | No |
4. Counsels
4. Facts
- Kyen Resources Pte Ltd was wound up by the court on 5 August 2019.
- Feima International (Hongkong) Ltd was wound up by the Hong Kong Court of First Instance on 31 July 2019.
- Feima lodged a proof of debt for US$49,355,996.30 in Kyen’s liquidation.
- Kyen Liquidators rejected Feima’s proof of debt based on alleged crossclaims.
- Kyen Liquidators lodged a proof of debt in Feima’s liquidation for US$159,308,190.27 based on the Crossclaims.
- Feima rejected Kyen’s proof of debt, which Kyen challenged in Hong Kong.
5. Formal Citations
- Kyen Resources Pte Ltd (in compulsory liquidation) and others v Feima International (Hongkong) Ltd (In Liquidation) and another matter, Civil Appeal No 4 of 2023, [2024] SGCA 7
6. Timeline
| Date | Event |
|---|---|
| Feima was wound up by the Hong Kong Court of First Instance. | |
| Kyen was wound up by the court. | |
| Feima Liquidators notified Kyen Liquidators of intent to lodge proof of debt. | |
| Kyen provided Feima with a copy of Kyen’s statement of affairs and a proof of debt form. | |
| Feima Liquidators lodged a proof of debt for US$49,355,996.30. | |
| Kyen Liquidators sent a list of questions to the Feima Liquidators concerning the Third-Party Transactions. | |
| Kyen Liquidators rejected Feima’s proof of debt. | |
| Feima appealed the rejection of its proof of debt to the General Division of the High Court in HC/OS 828/2021. | |
| OS 828 was heard by the Judge. | |
| Judgment was delivered on OS 828. | |
| Kyen Liquidators lodged a proof of debt in Feima’s liquidation for the sum of US$159,308,190.27 based on the Crossclaims. | |
| Kyen’s proof of debt was rejected by the Feima Liquidators. | |
| Kyen challenged the rejection in the Hong Kong Court of First Instance in HCCW 309/2018. | |
| Feima notified the court that it intended to file an application to stay the appeal. | |
| Feima filed CA/SUM 22/2023 seeking a stay of the appeal. | |
| The parties jointly filed a Consent Summons in the HK Proceedings for the hearing, which was initially scheduled for 7 September 2023, to be vacated. | |
| The application was granted by the Hong Kong Court of First Instance. | |
| Initial scheduled hearing date for the Consent Summons in the HK Proceedings. | |
| Parties informed the court that they had consented to the HK Proceedings being heard on or after 11 December 2023. | |
| SUM 22 and the appeal were heard together. | |
| Judgment was delivered. |
7. Legal Issues
- Entitlement to Set-Off Crossclaims
- Outcome: The court held that the Kyen Liquidators were not entitled to account for the Crossclaims when adjudicating Feima’s proof of debt.
- Category: Substantive
- Sub-Issues:
- Availability of insolvency set-off
- Requirements for mutual credits, debts, or dealings
- Applicability of Res Judicata
- Outcome: The court held that the doctrine of res judicata was not engaged as the Crossclaims were asserted for different purposes in relation to each liquidation.
- Category: Procedural
- Sub-Issues:
- Issue estoppel
- Cause of action estoppel
- Rule in Henderson v Henderson
8. Remedies Sought
- Admission of proof of debt
- Rejection of proof of debt
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Liquidation
- Crossclaims
- Debt Recovery
11. Industries
- Commodities Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Larsen Oil and Gas Pte Ltd v Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) | Court of Appeal | Yes | [2011] 3 SLR 414 | Singapore | Cited for the principle that the proof of debt process is the substituted means of enforcing debts against the company. |
| American International Assurance Co Ltd v Wong Cherng Yaw and others | High Court | No | [2009] SGHC 89 | Singapore | Cited for the principle that set-offs have a narrower meaning than cross-claims. |
| Jurong Aromatics Corp Pte Ltd (receivers and managers appointed) and others v BP Singapore Pte Ltd and another matter | High Court | No | [2018] SGHC 215 | Singapore | Cited for the observation that other forms of set-off, such as equitable set-off, are not excluded just because they are not provided for in statute. |
| Tanning Research v O’Brien | High Court of Australia | No | [1990] 91 ALR 180 | Australia | Cited for the proposition that circumstances tending to show fraud, collusion or miscarriage of justice offer occasions for the exercise by the Court of Bankruptcy of its power to inquire into the consideration for the judgment. |
| Re National Wholemeal Bread and Biscuit Co | Court of Appeal of England and Wales | No | [1892] 2 Ch 457 | England and Wales | Cited by the Kyen Appellants for the position that liquidators were entitled to account for the company’s crossclaims even if there was a dispute in respect of those claims. |
| Re Burnden Group Ltd; Fielding and another v Hunt (acting as Liquidator of the Burnden Group Ltd) | High Court of England and Wales | No | [2017] EWHC 406 (Ch) | England and Wales | Cited as authority for the principles governing the costs of appealing against a liquidator’s decision in the adjudication of a proof of debt. |
| Re Kenworth Engineering Ltd V | N/A | No | [2005] HKCU 162 | Hong Kong | Cited as authority for the principles governing the costs of appealing against a liquidator’s decision in the adjudication of a proof of debt. |
| Bank of Credit and Commerce International (Overseas) Ltd (in liquidation) v Habib Bank Ltd | High Court of England and Wales | No | [1999] 1 WLR 42 | England and Wales | Cited by Feima for the argument that res judicata arose in respect of the Crossclaims. |
| Brandon v McHenry | Court of Appeal of England and Wales | No | (1891) 1 QB 538 | England and Wales | Cited in Habib Bank as standing for the proposition that where the creditor did not challenge the rejection of the proof of debt in court when entitled to do so, the creditor cannot subsequently seek to recover the debt by other means. |
| Dayang (HK) Marine Shipping Co, Ltd v Asia Master Logistics Ltd | Hong Kong Court of First Instance | No | [2020] HKCU 494 | Hong Kong | Cited Habib Bank for the proposition that unless and until set aside by way of an appeal, the decisions of the liquidator in rejecting a proof of debt are binding for all purposes. |
| Deluxe Developments Pty Ltd (in liq) v Downer EDI Engineering Pty Ltd | Supreme Court of New South Wales | No | [2017] NSWSC 894 | New South Wales | Cited for the view that the right of set-off may be the subject of a res judicata estoppel in Deluxe’s favour as a result of the Liquidators’ rejection of the Proof of Debt. |
| Merck Sharp & Dohme Corp (formerly known as Merck & Co, Inc) v Merck KGaA (formerly known as E Merck) | Court of Appeal | No | [2021] 1 SLR 1102 | Singapore | Cited for the appropriate control or gatekeeping mechanisms to define the outer boundaries of transnational issue estoppel. |
| Re Mendarma Pty Ltd (in liq) (No 2) | N/A | No | Re Mendarma Pty Ltd (in liq) (No 2) (2007) 61 ACSR 601 | N/A | Cited as authority for the principles governing the costs of appealing against a liquidator’s decision in the adjudication of a proof of debt. |
| Wren v Mahony | N/A | No | Wren v Mahony (1972) 126 CLR 212 | N/A | reference to the grounds on which a court of bankruptcy will go behind a judgment |
| Henderson v Henderson | N/A | No | Henderson v Henderson (1843) 3 Hare 100 | N/A | Feima argued that the Kyen Appellants were estopped by the doctrine of res judicata (whether by issue estoppel, cause of action estoppel, or the rule in Henderson v Henderson (1843) 3 Hare 100) from pursuing the Crossclaims as Kyen’s proof of debt was rejected by the Feima Liquidators. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Companies Act | Singapore |
| Bankruptcy Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Proof of debt
- Liquidation
- Crossclaims
- Set-off
- Res judicata
- Insolvency set-off
- Pari passu
- Liquidator
- Mutual credits
- Mutual debts
- Mutual dealings
15.2 Keywords
- Insolvency
- Liquidation
- Proof of Debt
- Crossclaims
- Set-off
- Singapore
- Court of Appeal
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Winding Up | 95 |
| Insolvency Law | 90 |
| Proof of Debt | 85 |
| Liquidation | 80 |
| Bankruptcy | 75 |
| Crossclaims | 70 |
| Set-off | 65 |
| Res Judicata | 60 |
| Civil Procedure | 50 |
16. Subjects
- Insolvency
- Liquidation
- Civil Procedure