Park Hotel CQ v Law Ching Hung: Insolvency Set-Off & Winding-Up Order

In two suits, Park Hotel CQ Pte Ltd (in liquidation) and Park Hotel Management Pte Ltd (in liquidation), along with their liquidators, brought claims against Law Ching Hung and others. Law Ching Hung and Park Hotel Group Management Pte Ltd sought leave to amend their defences to introduce counterclaims. The High Court dismissed the applications, holding that counterclaims against a company in insolvent liquidation require court leave under s 133(1) of the Insolvency, Restructuring and Dissolution Act 2018 unless they qualify as insolvency set-off, which the defendants' claims did not.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

The defendants’ applications to amend their defences to bring the relevant counterclaims are dismissed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court judgment on insolvency set-off and winding-up orders, addressing counterclaims against companies in liquidation.

1.7 Decision Date

21 April 2024

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Law Ching Hung	Defendant	Individual	Applications to amend defences dismissed	Lost	Nanthini d/o Vijayakumar of TSMP Law Corporation
Park Hotel CQ Pte. Ltd. (in liquidation)	Plaintiff	Corporation	Applications to amend defences dismissed	Lost	Lee Bik Wei of Allen & Gledhill LLP
Aw Eng Hai (in his capacity as a joint and several liquidator of Park Hotel CQ Pte Ltd (in liquidation))	Plaintiff	Individual	Applications to amend defences dismissed	Lost	Lee Bik Wei of Allen & Gledhill LLP
Kon Yin Tong (in his capacity as a joint and several liquidator of Park Hotel CQ Pte Ltd (in liquidation))	Plaintiff	Individual	Applications to amend defences dismissed	Lost	Lee Bik Wei of Allen & Gledhill LLP
Park Hotel Management Pte Ltd (in liquidation)	Plaintiff	Corporation	Applications to amend defences dismissed	Lost	Lee Bik Wei of Allen & Gledhill LLP
Aw Eng Hai (in his capacity as a joint and several liquidator of Park Hotel Management Pte Ltd (in liquidation))	Plaintiff	Individual	Applications to amend defences dismissed	Lost	Lee Bik Wei of Allen & Gledhill LLP
Kon Yin Tong (in his capacity as a joint and several liquidator of Park Hotel Management Pte Ltd (in liquidation))	Plaintiff	Individual	Applications to amend defences dismissed	Lost	Lee Bik Wei of Allen & Gledhill LLP
Park Hotel Group Management Pte Ltd	Defendant	Corporation	Applications to amend defences dismissed	Lost	Nanthini d/o Vijayakumar of TSMP Law Corporation
Good Movement Holdings Limited	Defendant	Corporation		Neutral
SG Inst of Hospitality Pte Ltd	Defendant	Corporation		Neutral

3. Judges

Judge Name	Title	Delivered Judgment
Goh Yihan	Judge	Yes

4. Counsels

Counsel Name	Organization
Nanthini d/o Vijayakumar	TSMP Law Corporation
Lee Bik Wei	Allen & Gledhill LLP

4. Facts

Park Hotel CQ Pte Ltd was placed into compulsory liquidation on 19 November 2021.
Park Hotel Management Pte Ltd was placed into liquidation on 2 July 2021.
Law Ching Hung was the sole director and chief executive officer of Park Hotel CQ Pte Ltd from 3 April 2013 until 16 March 2021.
Suits 363 and 364 were brought by the liquidators of Park Hotel CQ and Park Hotel Management against Law Ching Hung and others.
Law Ching Hung and Park Hotel Group Management Pte Ltd sought leave to amend their defences to introduce counterclaims.
The plaintiffs argued that the counterclaims were caught by the mandatory stay in s 133(1) of the IRDA.

5. Formal Citations

Park Hotel CQ Pte Ltd (in liquidation) and others v Law Ching Hung and another suit, Suit No 363 of 2022 (Summons No 249 of 2024) and Suit No 364 of 2022 (Summonses Nos 247 and 248 of 2024), [2024] SGHC 105

6. Timeline

Date	Event
2013-04-03	Law Ching Hung appointed sole director and chief executive officer of Park Hotel CQ Pte Ltd.
2021-03-16	Law Ching Hung ceased being the sole director and chief executive officer of Park Hotel CQ Pte Ltd.
2021-07-02	Park Hotel Management Pte Ltd placed into liquidation.
2021-11-19	Park Hotel CQ Pte Ltd placed into compulsory liquidation.
2022-01-01	Suit No 363 of 2022 filed.
2022-01-01	Suit No 364 of 2022 filed.
2024-03-06	Plaintiffs’ Written Submissions in SUM 249 and SUM 247-248 dated.
2024-03-28	Defendants’ Letter to Court dated.
2024-03-29	Plaintiffs’ Further Written Submissions dated.
2024-04-01	Judgment reserved.
2024-04-22	Judgment delivered.

7. Legal Issues

Insolvency Set-off
- Outcome: The court held that only insolvency set-off is permissible against a company in insolvent liquidation.
- Category: Substantive
- Sub-Issues:
  - Scope of insolvency set-off
  - Mutual dealings requirement
Winding-Up Order
- Outcome: The court held that counterclaims against a company in insolvent liquidation require court leave under s 133(1) of the IRDA unless they qualify as insolvency set-off.
- Category: Procedural
- Sub-Issues:
  - Leave of court to bring counterclaim
  - Mandatory stay of proceedings

8. Remedies Sought

Monetary Damages
Leave to amend Defence and introduce counterclaims

9. Cause of Actions

Breach of Fiduciary Duty
Breach of Trust
Transactions at an Undervalue
Transactions Defrauding Creditors
Knowing Receipt
Unlawful Means Conspiracy

10. Practice Areas

Commercial Litigation
Insolvency Litigation

11. Industries

Hospitality

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Kyen Resources Pte Ltd (in compulsory liquidation) and others v Feima International (Hong Kong) Ltd (in liquidation) and another matter	Court of Appeal	Yes	[2024] SGCA 7	Singapore	Cited for the open issue of whether insolvency set-off was the exclusive form of permissible set-off against a company in insolvent liquidation.
Cargologicair Ltd v WWTAI Airopco 1 Bermuda Ltd	English High Court	Yes	[2024] EWHC 508 (Comm)	England and Wales	Cited for the proposition that a separate application for permission to advance a counterclaim is not required when a company is under administration.
Hyflux Ltd v SM Investments Pte Ltd	High Court	Yes	[2020] 4 SLR 1265	Singapore	Cited for the issue of when a counterclaim can be brought by a defendant against a plaintiff company protected by a moratorium without obtaining prior leave of court.
Langley Constructions (Brixham) Ltd v Wells	English Court of Appeal	Yes	[1969] 1 WLR 503	England and Wales	Cited for the principle that a cross-demand can be used as a set-off to reduce or exclude the plaintiff’s claim, but not as a counterclaim to give the defendant some right beyond the right of defence to the claim.
Ogle v Earl Vane	N/A	Yes	(1868) LR 3 QB 272	N/A	Cited for the principle that a counterclaim is not maintainable against a trustee in bankruptcy, except so far as it is reduced to a set-off.
Federal Commerce & Navigation Co Ltd v Molena Alpha Inc	English Court of Appeal	Yes	[1978] 1 QB 927	England and Wales	Cited for the underlying rationale of equitable set-off, which is that the defendant’s counterclaim is so closely connected with the plaintiff’s claim that it impeaches the plaintiff’s demands.
Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd)	Court of Appeal of the Supreme Court of Western Australia	Yes	[2018] WASCA 163	Australia	Cited for the view that the statutory provision on insolvency set-off does not operate as a “code” of rights of set-off against an insolvent company.
Jurong Aromatics Corp Pte Ltd (receivers and managers appointed) and others v BP Singapore Pte Ltd and another matter	High Court	Yes	[2018] SGHC 215	Singapore	Cited for the view that equitable set-off is not excluded by the statutory provisions on insolvency set-off.
BP Singapore Pte Ltd v Jurong Aromatics Corp Pte Ltd (receivers and managers appointed) and others and another appeal	Court of Appeal	Yes	[2020] 1 SLR 627	Singapore	Cited as the Court of Appeal expressly declined to decide the issue of whether equitable set-off was available against an insolvent company.
Re Nortel GmbH (in administration) and related companies	UK Supreme Court	Yes	[2014] AC 209	United Kingdom	Cited for the general inclination on the court’s part to allow as many claims to be admitted to proof as the words of the statute can bear.
Re Lehman Brothers International (Europe) (in administration) (No 4)	UK Supreme Court	Yes	[2018] AC 465	United Kingdom	Cited as an example of non-provable claims.
Re Ocean Tankers (Pte) Ltd (in liquidation)	High Court	Yes	[2023] SGHC 330	Singapore	Cited for the characteristic of legal set-off enabling the set-off of entirely unconnected and independent claims.
Fuller v Happy Shopper Markets Ltd and another	English High Court	Yes	[2001] 1 WLR 1681	England and Wales	Cited for the explanation that legal set-off is a procedural device designed to avoid circuity of actions.
Stein v Blake	House of Lords	Yes	[1996] 1 AC 243	United Kingdom	Cited for contrasting the procedural nature of legal set-off with the substantive nature of insolvency set-off.
British Eagle International Air Lines Ltd v Compagnie Nationale Air France	House of Lords	Yes	[1975] 1 WLR 758	United Kingdom	Cited for the principle that an attempt to “contract out” of insolvency legislation is contrary to public policy.
Joo Yee Construction Pte Ltd (in liquidation) v Diethelm Industries Pte Ltd and others	High Court	Yes	[1990] 1 SLR(R) 171	Singapore	Cited for applying British Eagle, holding that a clause allowing direct payment to subcontractors in the event of insolvency was an impermissible attempt at achieving a non-pari passu distribution.
International Air Transport Association v Ansett Australia Holdings Ltd	High Court of Australia	Yes	[2008] HCA 3	Australia	Cited as a case with essentially identical facts as British Eagle, but reaching a different result due to differences in the drafting of the clearing house rules.
Abdul Salam Asanaru Pillai (trading as South Kerala Cashew Exporters) v Nomanbhoy & Sons Pte Ltd	High Court	Yes	[2007] 2 SLR(R) 856	Singapore	Cited for the operation of equitable set-off to obviate the injustice that would result in allowing the claimant to assert his claim without giving account for a closely related counterclaim of the defendant.
Manson v Smith (liquidator of Thomas Chaisty Ltd)	English Court of Appeal	Yes	[1997] 2 BCLC 161	England and Wales	Cited for the principle that there is no set-off available between a debt due to a misfeasant and his liability to repay the moneys which he has been ordered to pay in misfeasance proceedings.
Feima International (Hongkong) Ltd v Kyen Resources Pte Ltd (in liquidation) and others	High Court	Yes	[2022] SGHC 304	Singapore	Cited for the observation that “misfeasance cannot constitute a ‘dealing’ for the purposes of set-off”.
Parakou Investment Holdings Pte Ltd and another v Parakou Shipping Pte Ltd (in liquidation) and other appeals	Court of Appeal	Yes	[2018] 1 SLR 271	Singapore	Cited for approving the statement in Goode on Insolvency that one of the conditions of insolvency set-off is that “the company’s claim must not have been based on the creditor’s wrongdoing”.
Re Eng Lee Ling and another matter	High Court	Yes	[2024] SGHC 52	Singapore	Cited for the effect of an equitable set-off being the same as the effect of paying a preference, because the beneficiary of the set-off in substance gets full payment of his debt to the extent of the set-off.
Stanford International Bank Ltd (in liquidation) v HSBC Bank plc	UK Supreme Court	Yes	[2023] AC 761	United Kingdom	Cited for the effect of an equitable set-off being the same as the effect of paying a preference, because the beneficiary of the set-off in substance gets full payment of his debt to the extent of the set-off.
Fabric Sales Ltd v Eratex Ltd	English Court of Appeal	Yes	[1984] 1 WLR 863	England and Wales	Cited in Cargologicair Ltd v WWTAI Airopco 1 Bermuda Ltd [2024] EWHC 508 (Comm) for the proposition that a separate application for permission to advance a counterclaim is not required when a company is under administration.

13. Applicable Rules

Rule Name
O 20 r 5(1) of the Rules of Court (2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 133(1) of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 218(2) of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 224 of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 438 of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 172 of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 203(1) of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 203(6) of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 219(3)(a) of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 219(1)(b) of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 219(1)(a) of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 64 of the Insolvency, Restructuring and Dissolution Act 2018	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Insolvency Set-off
Winding-Up Order
Liquidation
Counterclaim
Leave of Court
Moratorium
Pari Passu Principle
Mutual Dealings
Misfeasance
Director's Loan

15.2 Keywords

Insolvency
Winding up
Set-off
Counterclaim
Liquidation
Singapore
Court
IRDA

17. Areas of Law

Area Name	Relevance Score
Insolvency Law	95
Winding Up	95
Insolvency Set-off	70
Fiduciary Duties	60
Breach of Trust	60
Commercial Disputes	50
Misfeasance	40
Civil Procedure	40
Civil Rights	10

16. Subjects

Insolvency Law
Restructuring
Set-off
Civil Procedure