High Court · Decided 12 March 2013

Beluga Chartering GmbH (in liquidation) v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (Deugro (Singapore) Pte Ltd, non-party)

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[2013] SGHC 60Case no. Companies Winding Up No. 5 of 2012 (Summons No 3435 of 2012)

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Vinodh Coomaraswamy JC:
Introduction
Beluga Chartering
[1] Beluga Chartering GmbH (“Beluga Chartering”) is a limited liability company incorporated in 1996 under the laws of Germany. It is registered in the Commercial Register of the District Court of the German city of Bremen.
[2] On 1 June 2011, upon the application of 3 individuals described as “managing directors” of Beluga Chartering, the Insolvency Court of the Bremen District Court (“the Bremen Court”) made a finding that Beluga Chartering was insolvent. The Bremen Court accordingly appointed Mr Edgar Grönda (“the German Liquidator”) as Beluga Chartering’s permanent insolvency administrator under the German Insolvency Code (“Inolvenzordnung”, commonly abbreviated as “InsO”).
[3] On 17 February 2012, the High Court in Singapore wound up Beluga Chartering under Division 5 of Part X of the Companies Act on grounds of insolvency and appointed Mr Chee Yoh Chuang and Mr Abuthahir Abdul Gafoor (“the Singapore Liquidators”) as its liquidators.
This application
[5] The Singapore liquidators now apply pursuant to s 273(3) of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”) for my determination of the following two questions of law:
(a) Whether the provisions of Part X of the Act, in particular s 350(2), apply to Beluga Chartering and its Singapore liquidators without exception or modification, such that the Singapore liquidators are required to comply with Part X in carrying out their duties as liquidators of Beluga Chartering; and
(b) Subject to the determination of issue (a), whether the Singapore liquidators have the power, either under Part X of the Act or the general law, and are at liberty to repatriate Beluga Chartering’s assets in Singapore to the German Liquidator (or elsewhere as directed by the German Liquidator or his authorised representatives), to be administered in accordance with German law, notwithstanding the existence of unsatisfied judgment debts against Beluga Chartering incurred in Singapore.
[6] I answer these questions now:
(a) Yes. Subject to the provisos which follow at [7]-[8] below, the Singapore Liquidators are bound by Divisions 1, 2, 4 and 5 of Part X of the Act, including s 350(2), in the liquidation of Beluga Chartering without exception or modification such that they are required to comply with all of the obligations set out in those provisions in carrying out their duties as liquidators of Beluga Chartering.
(b) The Singapore liquidators have not a power but an obligation under s 377(3)(c) of the Act to transmit the proceeds of Beluga Chartering’s Singapore liquidation to the German Liquidator to be administered in accordance with German law, subject to the proviso which follows at [7] below.
[7] The proviso to the answers to both questions is that before transmitting the Singapore Proceeds (defined at [18] below) to the German Liquidator, the Singapore Liquidators are obliged to comply with section 377(3)(c) of the Act. The Singapore Liquidators must first, therefore: (i) pay any debts of Beluga Chartering which fall within s 328 of the Act; and (ii) pay any debts and satisfy any liabilities which Beluga Chartering has incurred in Singapore. This includes an obligation to satisfy the unsatisfied judgment debts against Beluga Chartering in favour of the Singapore Subsidiaries (defined at [13] below). This proviso is, in itself, subject to the further proviso at [8] below.
[8] The Singapore Liquidators’ distribution obligations under s 377(3)(c) of the Act are subject to the Court’s discretion under the ancillary liquidation doctrine to disapply all or part of those distribution obligations in its discretion in order to advance the objectives of the ancillary liquidation doctrine, if to do so is appropriate in all the circumstances of the case and so far as is consistent with justice and Singapore public policy.
[9] As will appear from the extended form of my answers, and for the reasons which I set out in detail below, the two questions framed and presented to me on this application are not entirely apt to cover what is in substance in issue in this application. But those questions and the summary answers I have given suffice as a basis to commence discussion of the issues raised.
The applicants
[10] Beluga Chartering was initially the sole applicant. But s 273(3) of the Act empowers the Singapore Liquidators – not Beluga Chartering – to apply to the Court for directions such as the ones sought on this application. So, Beluga Chartering applied for an order adding the Singapore Liquidators as joint applicants. I made the order with the consent of all parties.
[11] The German Liquidator is not an applicant. However, counsel for the applicants confirmed: (1) that he represents the German Liquidator in addition to the Singapore Liquidators and Beluga Chartering for the purposes of this application; (2) that the German Liquidator does not take a position different from that taken by the Singapore Liquidators and by Beluga Chartering on this application; and (3) that the German Liquidator accepts that he will be bound by my determination of this application.
[12] The applicants have named two respondents to this application:
(a) Beluga Projects (Singapore) Pte Ltd (“Beluga Singapore”); and
(b) Beluga Chartering Asia Pte Ltd (“Beluga Asia”).
[13] Each respondent is a judgment creditor of Beluga Chartering. Each respondent is a wholly-owned subsidiary of Beluga Chartering. Each respondent is a company incorporated in Singapore. Each respondent is itself in liquidation. Beluga Asia was ordered to be wound up on 2 September 2011 in Companies Winding Up No 102 of 2011. Its liquidator is the Official Receiver. Beluga Singapore was ordered to be wound up on 13 January 2012 in Companies Winding Up No 101 of 2011. Its liquidators are Mr Sim Guan Seng and Mr Goh Yeow Kiang Victor, both of Baker Tilly TFW LLP. I shall refer to both respondents as “the Singapore Subsidiaries”.
deugro (Singapore) Pte Ltd
[14] Also before me is a non-party to this application: deugro (Singapore) Pte Ltd (“deugro Singapore”). deugro Singapore is a company incorporated in Singapore and carrying on business in Singapore. deugro Singapore owes Beluga Chartering US$1,259,647.42 (“the deugro Asset”). The deugro Asset is Beluga Chartering’s only known asset in Singapore. deugro Singapore has been served with and heard on this application because the deugro Asset is in essence the subject-matter of this application.
[15] deugro Singapore also asserts a right to set off US$410,000 against the deugro Asset. The Singapore Liquidators, presumably with the German Liquidator’s knowledge and consent, have acknowledged deugro Singapore’s right of set off in that amount. In light of that, deugro Singapore informed the Court that it takes a neutral position as to whom it is to pay the remainder of the deugro Asset. Taking that set-off into account reduces the deugro Asset to US$849,647.42.
Beluga Asia and Beluga Singapore become judgment creditors of Beluga Chartering
[16] On 31 March 2011, the Singapore Subsidiaries together sued Beluga Chartering in Suit No. 227 of 2011 (“the Suit”) as joint plaintiffs. On 1 April 2011, they sought and obtained an injunction against Beluga Chartering freezing the deugro Asset pending trial or further order (“the Injunction”). That Injunction remains in force today.
[17] On 20 April 2011, the Singapore Subsidiaries obtained joint judgment against Beluga Chartering in default of appearance. The judgment required Beluga Chartering to pay Beluga Singapore the sum of S$560,663.47 and to pay Beluga Asia the sum of S$854,967.74.
The parties’ positions on the application
[18] The gist of the Singapore Liquidators’ application is that they, with the German Liquidator’s concurrence, seek directions from the Court permitting them to transmit the deugro Asset, after taking into account deugro Singapore’s set-off, to the German Liquidator for him to distribute to Beluga Chartering’s worldwide creditors – including the Singapore Subsidiaries – in a single insolvency under and in accordance with the InsO and German law. For reasons I give below at [278], it is an open question whether deugro Singapore’s claimed right of set-off is valid under Singapore insolvency law. I therefore express no view as to whether or not as a matter of Singapore insolvency law the money which the Singapore liquidators seek to transmit to the German Liquidator ought to take into account deugro Singapore’s claimed set-off. I will refer to the money to be transmitted to the German Liquidators simply as the “the Singapore Proceeds”, whatever the quantum may be.
[19] Beluga Asia and Beluga Singapore oppose Beluga Chartering’s application. Beluga Asia was represented by the Official Receiver. Beluga Singapore was not represented by counsel and made no separate submissions. However one of Beluga Singapore’s joint liquidators attended the hearing of this application on behalf of Beluga Singapore with the consent of all parties. He informed me that Beluga Singapore associates itself with the Official Receiver’s submissions in their entirety.
[20] deugro Singapore, as I have said, takes a neutral position on the application, given that the Singapore Liquidators have acknowledged its right of set-off.
The parties’ submissions summarised
[22] The Singapore Liquidators argue as follows. The Singapore liquidation is ancillary to the German liquidation. The Singapore Proceeds, although realised in a liquidation in Singapore, should be transmitted to the principal liquidation in Germany. There, all of Beluga Chartering’s global assets can be pooled in a single global fund. Out of that fund, the German Liquidator can declare dividends pari passu for all of Beluga Chartering’s creditors worldwide. The incidents of an ancillary liquidation, including the power to transmit assets to a principal liquidation, are not expressly set out in Part X of the Act. But these incidents are either implicit in the statutory regime of Part X or they run in parallel with Part X at common law. Transmission of the Singapore Proceeds to the German liquidation will cause the Singapore Subsidiaries no prejudice. They will be treated equally with the general body of Beluga Chartering’s unsecured creditors under the InsO and German law. Conversely, unsecured creditors in Singapore should not have priority over all other unsecured creditors of Beluga Chartering by the happenstance that Beluga Chartering has assets in Singapore.
[23] In response, the Official Receiver argues as follows. Nothing in the Act expressly or impliedly permits a Singapore Court to authorise the Singapore Liquidators to transmit the Singapore Proceeds to a foreign liquidator. The Act does not contain a provision analogous to s 426 of the Insolvency Act 1986 (c 45) (UK) (“English Insolvency Act”). That section expressly permits the insolvency courts of England and Wales to lend assistance to a foreign liquidation. English decisions on the incidents of an ancillary liquidation are therefore of little assistance to a Singapore Court. The Singapore courts historically have not been persuaded to operate outside the statutory framework of the Act in company law matters. Therefore, there is no common law power to authorise transmission. Even if the common law ancillary liquidation doctrine is found to apply in Singapore, the transmission of assets realised in Singapore is subject to satisfaction of liabilities incurred in Singapore, in accordance with the ring-fencing provision found in Division 2 of Part XI of the Act. Even though Beluga Chartering was not carrying on business in Singapore, s 350(2) in Part X of the Act is wide enough to apply the ring-fencing provision in Division 2 of Part XI to a liquidation under Division 5 of Part X, such as that of Beluga Chartering. Alternatively, Beluga Chartering was carrying on business in Singapore, despite not having registered under s 368 of the Act, and the ring-fencing provision applies to it.
[24] A summary of my conclusions is as follows:
(a) The ancillary liquidation doctrine is neither an express nor an implied part of the statutory insolvency scheme under Part X of the Act.
(b) But the ancillary liquidation doctrine is nevertheless a long-standing part of Singapore law. So too are the English common law principles underpinning that doctrine. Those principles were most recently analysed by Lord Hoffman in the House of Lords decision of Re HIH Casualty and General Insurance Ltd and others; McGrath and others v Riddell and another [2008] 1 WLR 852 (“Re HIH”).
(c) Therefore a Singapore court will, as far as is consistent with justice and Singapore public policy, cooperate with the courts in the place of incorporation of an insolvent foreign company to ensure that all of its assets are distributed to its creditors under a single system of distribution. To that end, the Singapore courts have a discretion, to be exercised in all the circumstances of the case, to disapply the obligations of Singapore liquidators under Singapore’s statutory insolvency scheme even if the effect would be to deprive creditors who have proved in Singapore of substantive rights under Singapore’s insolvency law.
(d) Section 377(3)(c) of the Act applies to the liquidation of Beluga Chartering by virtue of s 350(2) of the Act. Section 365 of the Act does not prevent s 377(3)(c) from so applying. The Singapore Liquidators are therefore bound both by the transmission obligations and the distribution obligations in s 377(3)(c) of the Act.
(e) The Singapore Liquidators’ obligation to distribute the Singapore Proceeds in accordance with s 377(3)(c) is subject to the Court’s discretion under the ancillary liquidation to disapply that obligation if it is appropriate to do so in all the circumstances of the case and if to do so is consistent with justice and Singapore public policy.
(f) On the facts of this case, I decline to exercise my discretion to disapply the obligation in s 377(3)(c) to the Singapore liquidation of Beluga Chartering.
[25] The result is that the Singapore Liquidators are obliged to transmit the Singapore Proceeds to the German Liquidator, but only after they pay its debts and satisfy its liabilities incurred in Singapore. This will include the judgment debt due to the Singapore Subsidiaries.
[26] To explain in detail the basis for these conclusions, I first consider the history of our statutory insolvency scheme. I then analyse the provisions of our statutory insolvency scheme in the context of its text, history and purpose. I then consider three seminal cases – two from England and one from Singapore – which consider how that scheme should be applied in the liquidation of a foreign company. I conclude by summarising the undisputed facts of this case and by applying the principles which I derive from this analysis of the law to those facts.
History of our statutory insolvency scheme
Universalism and territorialism
[27] Both the applicants and the respondents have framed their arguments at several levels of conceptual generality. At the highest level, the dispute has been framed as a contest between two competing aspirations in cross-border insolvency: universalism and territorialism. The Singapore Liquidators on behalf of Beluga Chartering advocate a version of universalism. The Official Receiver on behalf of the Singapore Subsidiaries advocates a version of territorialism.
[28] The following passage from the article “Lessons for the Development of Singapore’s International Insolvency Law” by Assistant Professor Wee Meng Seng, (2011) 23 SAcLJ 932 at para 6 explains in a nutshell the difference between the two approaches:
[29] English insolvency law gives effect to the goals of universalism – at least in part – through the ancillary liquidation doctrine. Whatever the normative accounts of this doctrine may say, the classical descriptive account of the doctrine is found in the four propositions set out in the decision of Sir Richard Scott V-C in Re Bank of Credit and Commerce International S.A. (No. 10) [1997] 1 Ch 213 (“Re BCCI ”) (at 246):
[30] The aspiration comprised in Scott V-C’s third proposition is implemented in English insolvency law by a transmission order. It is by transmitting the proceeds of a local liquidation to the principal liquidation for distribution that the universalist aspiration is achieved. A transmission order is, in essence, what the Singapore Liquidators want in this application.
[31] The debate between universalism and territorialism – whether pure or modified – may be useful conceptual background material for the questions posed on this application. However, that debate is essentially a normative one. It is therefore at too high a level of generality to be of direct assistance to me as a court of first instance. Determining the applicants’ questions requires me to ascertain and apply Singapore insolvency law as it is, not as it should be. And so I start with our statutory insolvency scheme.
The history of our legislation
[32] Our statutory insolvency scheme is set out in the Act. It is derived from the Malaysian Companies Act 1965 (Act No 79 of 1965) (“the 1965 Act”). That was in turn based on the Companies Act 1961 (No 6839 of 1961) of the Australian state of Victoria (“the 1961 Act”). The Malaysian Act, the 1961 Act and our Act have their ultimate roots in the Companies Act 1948 (c 38) (UK) (“the 1948 Act”) and its predecessor legislation in England.
[33] Despite certain idiosyncrasies, the fundamental features of our statutory insolvency scheme can be found either verbatim or with readily recognisable analogues in the historical English insolvency enactments and also in the modern descendants of these enactments which have developed in parallel in England and in the Commonwealth. I consider first the historical English enactments.
English authorities remain of relevance in interpreting our Act
[34] The English Companies Act 1862 (25 & 26 Vict c 89) (“the 1862 Act”) was the first English statute to bear that name. It was the model for the Straits Settlements’ Companies Ordinance 5 of 1889 (“the 1889 Ordinance”). The provisions of the 1889 Ordinance and the courts’ approach in interpreting and applying it are readily familiar to any insolvency lawyer or judge even today.
[35] In 1890, the courts of the Straits Settlements decided the case of In re The Rawang Tin Mining Co., Limited, & The Chartered Bank of India, Australia And China (neutral citations [1890] Ky 14, [1890] SLJ 8; hardcopy citations [1885-90] 4 Ky 570, [1890] 3 Straits LJ 27). The judgment of O’Malley CJ at first instance was upheld on appeal by Pellereau and Wood JJ in the Court of Appeal. They applied the insolvency provisions of the 1889 Ordinance to decide the case.
[36] What is at once striking upon reading the judgment of O’Malley CJ is how easily a modern reader – even over 120 years after the case was decided in 1890 – can understand not only the court’s statements of general principle but also the court’s references to specific provisions in the statutory insolvency scheme under the 1889 Ordinance. I cite as an example a passage from the judgment of O’Malley CJ:
English common law remains relevant
[37] In RBG Resources plc (in liquidation) v Credit Lyonnais [2006] 1 SLR(R) 240 (“RBG”), Woo Bih Li J held that the ancillary liquidation doctrine and the transmission orders that it entails are part of Singapore’s common law. I agree.
[38] But it was not RBG which first introduced the ancillary liquidation doctrine into Singapore law. As long ago as 1926, Murison CJ in Re Lee Wah Bank (neutral citation [1926] MC 5; hardcopy citation 2 Malayan Cases 81), a decision of the courts of the Straits Settlements, expressed the ancillary doctrine’s underlying principles and made a transmission order. The Chinese Merchants Bank Ltd was a bank incorporated in Hong Kong with a branch in Saigon. It went into liquidation in both Hong Kong and in Saigon but not in the Straits Settlements. The Saigon branch had a credit balance in an account with the Lee Wah Bank Ltd in Singapore. The question for Murison CJ’s determination was whether Lee Wah Bank should pay that credit balance to the Saigon liquidators (as an asset of the Saigon branch) or to the Hong Kong liquidator (as the principal liquidators, being the liquidators in the insolvent company’s place of domicile).
[39] Murison CJ said as follows:
[40] Singapore’s version of the ancillary liquidation doctrine is historically derived from and strongly aligned with the ancillary liquidation doctrine in English law. The dictum of Vaughan Williams J which Murison CJ cites in this passage is from the decision in Re English, Scottish and Australian Chartered Bank [1893] 3 Ch 385 at 394. The principles in this case continue today to comprise at least part of the foundation of the ancillary liquidation doctrine in English law: see Re HIH at [60].
Conclusion
[41] Company law – and in particular insolvency law – did not start with a blank slate in Singapore in 1967. By 1967, the ancillary liquidation doctrine was a well-established part of Singapore law. Further, the decisions of English and Commonwealth courts considering statutory insolvency schemes under or derived from common English ancestors remain of assistance today in interpreting and applying the provisions of our own scheme. Decisions of these courts analysing or distilling common law principles which apply in insolvency – such as the ancillary liquidation doctrine – are equally of assistance today.
[42] Of course, we must always be mindful of local idiosyncrasies. There are only three idiosyncrasies in our statutory insolvency scheme that are relevant to this matter. They are ss 365, 368 and aspects of s 377. All of these provisions are found in Division 2 of Part XI of the Act. I will consider and analyse these idiosyncrasies separately in the course of this judgment.
[43] For these reasons, and subject to this qualification, I cannot accept the Official Receiver’s submission that the ancillary liquidation doctrine and the transmission orders necessary to give effect to it do not form part of Singapore law. They both form a long-standing part of Singapore’s insolvency law and its common law. I also cannot accept the Official Receiver’s submission that I should not rely on English and Commonwealth decisions in interpreting our statutory insolvency scheme and in considering the common law gloss that has been put upon it
Some basic but necessary definitions
[44] Before looking in detail at that statutory insolvency scheme, certain basic definitions are necessary to avoid conceptual confusion.
Definition of “company”
[45] The word “company” is defined in s 4(1) of the Act as follows:
[46] This is a circular definition. The second use of “company” (underlined above) in this definition must, therefore, be given something other than the statutory meaning. The opening words of s 4 of the Act permit us to do this. Those words tell us that the definitions set out in s 4 apply “unless the contrary intention appears”. The circularity manifests a contrary intention. In this context, the second use of the word “company” must simply mean “legal person”.
[47] Therefore under s 4(1) a “company” is a legal person which has acquired its corporate status under Singapore’s past or present companies legislation. The necessary consequence is that every legal person which has acquired its corporate status otherwise than under Singapore’s companies legislation is not a “company” within the meaning of the Companies Act.
[48] To avoid confusion, I will refer to a company as defined in s 4(1) of the Act as a “Singapore company”. This is not a tautology: section 4(1) of the Act itself shows that “company” in the Act does not always mean “company” as defined in section 4(1).
Singapore-incorporated non-company
[49] Not every legal person incorporated under Singapore law is a Singapore company. The Companies Act is only one of the many Singapore statutes under which one or more persons can be deemed a legal person and acquire corporate status – be “incorporated” – under Singapore law: see for example s 3(2) of the Central Provident Fund Act (Cap 36, 2001 Rev Ed), s 2(1) the Central Sikh Gurdwara Board Act (Cap 357, 1985 Rev Ed), s 2(1) of the Minister for Finance (Incorporated) Act (Cap 183, 1985 Rev Ed), s 2(1) of the Bishop of Singapore Ordinance (Cap 355, 1985 Rev Ed), s 4 of the Limited Liability Partnerships Act (Cap 163A, 2006 Rev Ed).
[50] I will refer to a legal person incorporated under Singapore law but not under Singapore’s companies legislation as a “Singapore-incorporated non-company”.
Definition of “foreign company”
[51] A “foreign company” is defined in s 4(1) of the Act:
[52] We must once again read “company” in the term “foreign company” and in paragraph (a) of the statutory definition of that term simply as meaning “legal person”. To apply the section 4(1) definition of “company” to the definition of “foreign company” would otherwise lead to a paradox and a circularity.
[53] So a “foreign company” as defined in paragraph (a) of the definition of that term in s 4(1) of the Act means a legal person, corporation, society, association or other body incorporated outside Singapore.
Definition of “unregistered company”
[54] “Unregistered company” is defined in s 350(1) of the Act as follows:
[55] This is a non-exhaustive definition. The legislature contemplates entities which are outside the statutory definition but which are nevertheless “unregistered companies”. We must therefore give the term “unregistered company” an ordinary meaning for the non-exhaustive statutory definition to supplement. Once again, we cannot apply the s 4(1) definition of “company” because that would lead to a paradox. So “company” in this phrase again simply means “legal person”.
[56] “Unregistered” simply means the opposite of “registered”, as defined by s 4(1) of the Act. But in the context of this statutory definition, “unregistered” refers to and only to non-registration under s 19(3) of the Act. Registration under s 19(3) must not be confused with registration under s 368. Section 368 and the rest of Division 2 of Part XI of the Act set out a registration regime for a foreign company which establishes a place of business or carries on business in Singapore. Even if a foreign company registers under Division 2 of Part XI, it remains nevertheless an “unregistered company” within the meaning of s 350(1). I explain why at [86] below. I make this point here because both parties’ submissions incorrectly conflate non-registration under Division 2 of Part XI with the concept of an “unregistered company” defined in s 350(1). They are distinct concepts.
[57] The ordinary meaning of “unregistered company” is therefore a legal person not registered under s 19(3) of Singapore’s companies legislation or its predecessors. To that ordinary meaning, the non-exhaustive definition adds certain classes of entities – a “partnership”, “association” or “company” consisting of more than 5 members – but which the legislature deems to be “unregistered companies” for the purposes of the Act.
[58] A “foreign company” obviously is an “unregistered company”. A Singapore company equally obviously is not an “unregistered company”. Thus the definition in s 350(1) makes express provision for both: including the former and excluding the latter. But the key concept in the term “unregistered company” is not whether the legal person is local or foreign to Singapore: the key concept is incorporation under the Act. A legal person is an “unregistered company” so long as it is not incorporated under the Act even if it is incorporated under Singapore law. Thus, a Singapore-incorporated non-company is just as much an “unregistered company” as a “foreign company” is an “unregistered company”. To put it another way, every foreign company is also an unregistered company. But not every unregistered company is a foreign company.
[59] This is confirmed by s 354 of the Act. This section applies to a defunct unregistered company the same provisions in relation to unclaimed property as apply to a Singapore company. In doing so, the section specifically contemplates that an “unregistered company” whose insolvency is governed by Division 5 of Part X can have its origin in Singapore.
[60] This is an important point for the analysis which follows. It is perfectly possible for an unregistered company to have been incorporated or to otherwise be an entity under Singapore law – as long as that law is not Singapore’s companies legislation.
[61] Bearing these distinctions in mind, I now turn now to consider the statutory insolvency scheme under the Act and the competing submissions of how it should be interpreted and applied in the case of cross-border insolvency.
The statutory insolvency scheme under the Act
Liquidation of a Singapore company
[62] Part X of the Act is entitled “Winding Up”. It comprises 5 Divisions. Divisions 1, 2, 3 and 4 of Part X apply to the winding up of “companies”. “Company” here means a Singapore company, there being no signal from the context that we should disregard the statutory definition in s 4(1). Section 254(1) of the Act gives the Court a discretion to wind up a Singapore company compulsorily and appoint a liquidator if any one of the statutory grounds is established.
[63] A liquidator of a Singapore company appointed under section 254(1) of the Act has five broad sets of obligations: (a) to ascertain, get in and realise the assets of the Singapore company; (b) to settle a list of contributories and creditors of the Singapore company and to ascertain by adjudication of proof the value of each creditor’s claim; (c) to distribute the realised assets of the Singapore company in accordance with the priorities established by law and to return any surplus to the contributories; (d) to investigate and ascertain the causes of the Singapore company’s insolvency and if appropriate seek recourse against those responsible for it; and (e) when warranted, to conclude the liquidation by applying to Court for an order for his release and the dissolution of the Singapore company. All of these obligations are, of course, subject to sufficient assets being available to fund their discharge (see section 323(1) of the Act and r 187 Companies (Winding Up) Rules (Cap 50, R 1, 2006 Rev Ed)).
[64] A liquidator of a Singapore company derives his power to act for and on behalf of that company to achieve these broad objectives under and by virtue of Singapore law. He is appointed by a Singapore court. He holds the insolvent company’s assets under a statutory purpose trust created by Singapore insolvency law to preserve the assets of the company for distribution among the insolvent's unsecured creditors: In re The Rawang Tin Mining Co., Limited, & The Chartered Bank of India, Australia And China [1890] Ky 14, [1890] SLJ 8; Ng Wei Teck Michael v Oversea-Chinese Banking Corp Ltd [1998] 1 SLR(R) 778 at [31]; Power Knight Pte Ltd v Natural Fuel Pte Ltd (in compulsory liquidation) [2010] 3 SLR 82 at [43]-[52]; Ayerst (Inspector of Taxes) v C & K (Construction) Ltd [1976] AC 167 at 179-181.
[65] Where the Singapore company’s assets, management and books and records are all within Singapore, it is a straightforward task for the liquidator to exercise his powers in order to discharge his obligations. All third parties in Singapore are subject to Singapore law and are obliged to recognise the liquidator’s power and authority under Singapore law to act for and on behalf of the insolvent Singapore company. If they fail to do so, the Singapore Court will exercise its coercive powers to compel them to do so.
[66] The analysis becomes more complex if the Singapore company has some or all of its assets outside Singapore. The liquidators’ statutory duties and powers under the Act are not subject to any express or implied statutory territorial limits. There is therefore no statutory basis for holding that these duties and powers stop at Singapore’s shores. As Sir Richard Scott V-C said in Re BCCI at 236G: “Every . . . winding up has a theoretical international application.” The only limit on these powers and duties is practical one, as Scott V-C recognised at 241H:
[67] Thus, even though there is no statutory basis to limit the international nature of the winding up of a Singapore company, the ever-pragmatic common law recognises a territorial limitation on the liquidator’s otherwise worldwide duties and powers. This limitation arises because of the practical difficulty in performing these duties and exercising these powers outside Singapore.
[68] So the position is this: Divisions 1, 2 and 4 of Part X are clearly universalist in their theoretical approach and statutory intent. Every Singapore liquidator of a Singapore company is a worldwide liquidator with worldwide duties and worldwide powers. Further, every creditor of an insolvent Singapore company is entitled to come in and prove his debt in the Singapore liquidation, wherever in the world the creditor may be incorporated or domiciled, wherever in the world he may carry on business and whatever law may govern his claim against the Singapore company.
[69] But that is not to say that Divisions 1, 2 and 4 of Part X expressly or impliedly enact or envisage the ancillary liquidation doctrine. In fact, they do not do so. They are oblivious to any need to do so. They proceed on the fundamental but unstated basis that the Singapore liquidation will be the only liquidation in every case. This is not surprising. Divisions 1, 2 and 4 of Part X deal with liquidating a Singapore company. Conceptually, a Singapore company is a creature of a Singapore statute. Therefore, it can be born, live and die only under Singapore law. So a Singapore company must of necessity be wound up under Singapore law as the law of its place of incorporation. And pragmatically, it will have been the expectation of creditors and others doing business with a Singapore company anywhere in the world that its liquidation will take place in Singapore and under Singapore’s insolvency law. That is why there are no provisions in these Divisions which impose a statutory restriction on the territorial scope of the liquidator’s duties, or which provide a mechanism for determining whether – and if so when, in what circumstances and to what extent – the Singapore liquidator is to prevail over or defer to any ancillary foreign liquidator of the Singapore company which may be appointed in a foreign jurisdiction.
[70] I now turn to consider how, if at all, this conceptual approach differs in the Singapore liquidation of a foreign company.
Liquidation of an unregistered company
[71] As its title suggests, Division 5 of Part X governs the “Winding up of unregistered companies”. Section 351(1) of the Act gives the Court a discretion to wind up an “unregistered company” on certain grounds. The Singapore Court placed Beluga Chartering in liquidation under s 351(1) on the insolvency ground. So I will analyse only the insolvency ground in this judgment.
[72] Division 5 of Part X is not intended to be a complete, self-contained code for the liquidation of unregistered companies. That is why the legislature inserted s 350(2) into that Division.
[73] I analyse the scope of s 350(2) in greater detail at [105]-[117] below. It suffices for now to note simply that the word “companies” appears twice in s 350(2) and encompasses at the very least Singapore companies. So s 350(2) provides at the very least that nothing in Division 5 of Part X precludes the provisions of Divisions 1, 2 and 4 of Part X – which apply to the compulsory liquidation of a Singapore company – from applying in the liquidation of an unregistered company. Section 350(2) also provides, at the very least, that the liquidator of an unregistered company may exercise any power which he could exercise and do any act which he could do under Divisions 1, 2 and 4 of Part X.
[74] Division 3 cannot apply to the liquidation of an unregistered company because it applies only to voluntary liquidation, not compulsory liquidation as required by s 350(2), and because s 351(1)(b) expressly provides that an unregistered company cannot be liquidated voluntarily.
Division 5 of Part X does not enact or envisage the ancillary liquidation doctrine
[75] Division 5 of Part X governs the winding up of both foreign companies and Singapore incorporated non-companies (see [58] above), both being sub-types of unregistered companies. Division 5 is therefore equally capable of governing the liquidation of a wholly foreign entity with no domestic dimension as it is of governing the liquidation of a wholly domestic entity with no cross-border dimension. That is why Division 5 of Part X has no provisions in it specifically to govern the insolvency of foreign companies – as a subclass of unregistered companies – or even specifically to govern insolvencies of unregistered companies with a cross-border dimension. It simply sets out the default rules which govern the winding up of any entity – domestic or foreign – which is not incorporated under Singapore’s companies legislation.
[76] Like Divisions 1, 2 and 4 before it, Division 5 of Part X of the Act is not premised on a liquidation initiated under s 351(1) running in parallel with a foreign liquidation, let alone being ancillary to such a liquidation. It proceeds on the basis that the Singapore liquidation of an unregistered company will be the only liquidation. I say this for several reasons.
[77] First, in the case of an unregistered company which is a Singapore-incorporated non-company, the Singapore liquidation will clearly be the principal liquidation envisaged by the Act. The Singapore liquidation will not ordinarily be accompanied by a liquidation in another jurisdiction let alone be ancillary to another such liquidation.
[78] Second, in the case of a foreign company, there is no provision anywhere in Division 5 of Part X that a Singapore liquidator of a foreign company appointed under s 351(1) is to play an ancillary role to a foreign liquidator of that foreign company. It is not even a prerequisite for a winding up order under s 351(1) that the foreign company be in liquidation elsewhere so that the Singapore liquidation may be ancillary to it.
[79] Third, ss 351 and 352 of Division 5 of Part X expressly envisage that the court can appoint a Singapore liquidator for a foreign company after a foreign liquidation ends and even after the foreign company has been dissolved or has otherwise ceased to exist under the relevant foreign law. In such a situation too, there will be no principal liquidation elsewhere and hence no liquidation for the Singapore liquidation to be ancillary to.
[80] Division 5 of Part X of the Act is therefore completely indifferent to whether the liquidation of a foreign company under its provisions will be preceded by or followed by a liquidation in its home jurisdiction or indeed in any other foreign jurisdiction. A liquidation under Division 5 can start before a foreign liquidation has commenced or after a foreign liquidation has concluded. It can even take place after the foreign company has been dissolved.
[81] This explains why there are no provisions in Division 5 of Part X which restrict the territorial scope of the liquidator’s duties or which provide a mechanism for determining whether – and if so when, in what circumstances and to what extent – a Singapore liquidator of an unregistered company is to prevail over or defer to any foreign liquidator of the unregistered company. Division 5 – like Divisions 1, 2 and 4 – simply assumes that the Singapore liquidation of an unregistered company will in every case proceed from beginning to end as a worldwide liquidation with the Singapore liquidation being the only liquidation. There is no statutory basis in Division 5 to divert the Singapore liquidation of an unregistered company from that course. Division 5 does not expressly or impliedly envisage or enact the ancillary liquidation doctrine because it does not even envisage or enact cross-border aspects of Singapore’s insolvency law.
[82] The liquidation of an unregistered company under Division 5 of Part X of the Act – which includes the liquidation of a foreign company – is just as much a worldwide liquidation as the liquidation of a Singapore company under Divisions 1, 2 and 4 of Part X. Lord Hoffman confirmed this in Re HIH (at [8]-[9]):
[83] This passage, when read together with the passage from Re BCCI set out in [66] above, confirms that the English statutory insolvency scheme – on which our Part X is based – contemplates a worldwide liquidation of a foreign company in which the local liquidator enjoys or is subject to the full panoply of worldwide statutory rights, powers and obligations as the liquidator of a local company. Any limitation on the liquidator’s theoretical worldwide power is imposed by the common law and not by statute. It is therefore incorrect, as the Singapore Liquidators appear to presume, that because the Singapore liquidation is characterised as an ancillary liquidation, the Singapore Liquidators’ statutory duties are by that fact alone confined to collecting Singapore assets and transmitting the proceeds to the principal liquidation.
Division 5 of Part X applies to all foreign companies
[84] The next point I make is that Division 5 of Part X governs the winding up of every foreign company – a foreign company being one of the two classes of unregistered companies – whether or not the foreign company is carrying on business in Singapore. Section 351(4) of the Act provides that in Division 5 of Part X, “‘to carry on business’ has the same meaning as in section 366.” Section 366, of course, appears in Division 2 of Part XI.
[85] Division 5 of Part X clearly applies even to foreign companies which have a place of business or which carry on business in Singapore: see ss 351(1)(a), 351(1)(c)(i), 351(2)(a) and 351(2)(b).
[86] Division 5 of Part X also applies to the winding up of every foreign company even if the particular foreign company has registered under section 368 of the Act. In other words, an unregistered company which is a foreign company remains an unregistered company within the meaning of section 350(1) even if it registers under section 368. I say this for four reasons. First, the term “unregistered company” is defined in s 350(1) of the Act to include a “foreign company” without any qualification. The definition does not exclude foreign companies which register under section 368. Second, the only express exclusion in s 350(1) is for companies “incorporated” under Singapore’s companies legislation. So the relevant registration which removes a legal entity from the scope of the term “unregistered company” is registration by the Registrar of Companies under section 19(3) of the Act. Third, Division 2 of Part XI of the Act clearly contemplates that a foreign company which complies with its obligation to register under section 368 can be put into liquidation in Singapore. But Division 2 of Part XI itself contains no section which enables a court to make a winding up order analogous to section 254(1) (for Singapore companies) and section 351(1) (for unregistered companies). So the only section under which a court can wind up a foreign company – whether or not registered under s 368 – is s 351(1). Fourth, the legislative intent is that a foreign company which carries on business in Singapore without registering commits an offence (s 386). Parliament can hardly be taken to have legislated separately in Division 5 of Part X for the liquidation of lawbreakers who carry on business in Singapore but fail to register under s 368.
[87] So even in the case of a foreign company – whether or not it has a place of business in Singapore and whether or not it carries on business in Singapore – the Act contemplates that the Singapore liquidation will in every case proceed from beginning to end as a worldwide liquidation with the Singapore liquidation being the only liquidation. Even for foreign companies, Division 5 of Part X does not expressly or impliedly envisage or enact the ancillary liquidation doctrine.
[88] But s 377 does. It is that section to which I now turn.
The insolvency provisions of Division 2 of Part XI
[89] Division 2 of Part XI deals with insolvency only in s 377. In the historical context of our statutory insolvency scheme, s 377 is based on a relatively recent precursor. It originated in the 1961 Act and has no precursor in the 1948 Act or its predecessors. It operates by way of a gloss on the general insolvency scheme of Part X, which is far older. It represents the first attempt in the history of the insolvency scheme on which our Act is based to put certain aspects of the common law ancillary liquidation doctrine on a statutory footing.
[90] Three further aspects of Division 2 of Part XI are entirely local idiosyncrasies which we introduced in 1967 or later. These are: (a) s 365 which deals with the applicability of Division 2 of Part XI; (b) s 368 which determines which foreign companies are obliged to register in Singapore and when they must do so; and (c) s 377(3)(c) and s 377(7) which oblige a Singapore liquidator to ring-fence Singapore assets for payment of the foreign company’s preferential debts under Singapore law and for payment of debts incurred in Singapore by the foreign company.
[91] The legislative history of the most important aspect of s 377 – subsection (3) – is set out in Tohru Motobayashi v Official Receiver [2000] 3 SLR(R) 435 at [39] – [40] (“Tohru Motobayashi”). For present purposes, it suffices only to make the following observations about s 377(3) of the Act.
[92] The analogue in the 1961 Act of our Part XI is also numbered Part XI and is also titled “Various Types of Companies Etc”. The model for our s 377(3) is s 352(3) of the 1961 Act which provided as follows:
[93] Section 377(3) of the Act reads as follows:
The words I have underlined in s 377(3) are where our legislature has effected changes of substance to s 352(3) of the 1961 Act.
[94] The three limbs of s 377(3)(c) impose three duties on a Singapore liquidator of a foreign company.
[95] The first limb of s 377(3)(c) is taken directly from s 352(3)(c) of the 1961 Act. It imposes a specific territorial limit – by statute – on the obligation of the Singapore liquidator of a foreign company to get in and realise that company’s assets. The effect of this limb is to confine by statute, and subject to contrary order by the court, every insolvency to which this section applies prima facie to local assets only. This reverses the fundamental but unstated worldwide nature of every liquidation under Part X, whether of a Singapore company or of a foreign company.
[96] The second limb of s 377(3)(c) requires the liquidator of a foreign company to “pay the net amount so recovered and realised to the liquidator of that foreign company for the place where it was formed or incorporated”. This duty is taken virtually word for word from s 352(3)(c) of the 1961 Act. This limb states another aspect of the ancillary liquidation doctrine. It obliges the Singapore liquidator to transmit the Singapore proceeds to the principal liquidator so that he can distribute assets from a central pool in the principal liquidation in the foreign company’s place of incorporation.
[97] But in Singapore, this obligation is subject to a proviso which has no equivalent in 352 of the 1961 Act. Under our Act only, the Singapore liquidator must first pay preferential creditors under s 328 of the Act before paying any proceeds of the Singapore liquidation to the principal liquidator. Although the proviso is a local innovation, the substance is not novel. It merely puts on a statutory footing what has always been taken to be the case in an ancillary liquidation but which was left unexpressed in s 352(3)(c) of the 1961 Act. As Lord Hoffman said in Re HIH at [21], “the usual English practice is, when remittal to a foreign liquidator is ordered, to make provision for the retention of funds to pay English preferential creditors.” Thus, even under the ancillary liquidation doctrine, local assets are ring-fenced for the benefit of local preferential creditors.
[98] The third limb of s 377(3)(c) is the crucial one for the purposes of this case. It requires the liquidator to pay “any debts” and satisfy “any liabilities incurred in Singapore by the foreign company” before paying the net proceeds of the Singapore liquidation to the foreign liquidator. This limb ring-fences Singapore assets for the payment of debts incurred in Singapore by a foreign company. It is a wholly novel provision, having no equivalent in English or Australian legislation, or in the common law. It was enacted in Singapore in 1967 and mirrored in Malaysia in 1985 (Tohru Motobayashi at [40]). It abrogates the usual rule at common law and under Part X which is that all debts in each class of every liquidation – whether of a Singapore company or a foreign company – stand on an equal footing in a Singapore liquidation regardless of where they were incurred.
[99] It is important to note that s 377(3)(c) is not so territorial as to mandate ring-fencing for creditors from Singapore (cf [28] above). The national origin or domicile of the creditor is quite irrelevant under s 377(3)(c). Only the origin of the debt which the creditor claims against the foreign company is relevant. So in that sense, s 377(3)(c) is not territorial: all creditors, whatever their origin or domicile, enjoy the benefit of having Singapore assets ring-fenced to pay Singapore debts.
[100] But although s 377 enacts aspects of the ancillary liquidation doctrine, it is far from an attempt to enact or codify it. This is because it continues to envisage that a Singapore liquidation of a foreign company could be its sole or principal liquidation: thus s 377(4) envisages that a Singapore liquidation of a foreign company can commence and conclude with no principal liquidator in place.
Does section 377(3)(c) apply to the liquidation of Beluga Chartering?
[101] The question for me is whether s 377(3)(c) applies in the liquidation of Beluga Chartering. The Official Receiver submits that it does because that is the effect of s 350(2) of the Act, whether or not Beluga Chartering was carrying on business in Singapore. I therefore now consider the scope of s 350(2) and s 365 of the Act.
[102] There are three issues which I must consider:
(a) what “companies” means on each of the two occasions it appears in s 350(2);
(b) what, if anything, is the significance of the different structure of the two limbs of s 350(2); and
(c) whether s 365 of the Act establishes a condition precedent to the application of s 377 of the Act.
[103] In my view, for the reasons which follow, s 350(2) of the Act is wide enough not to preclude the operation of the insolvency provisions in s 377 in a liquidation under Division 5 of Part X. And s 365 does not establish a condition precedent for the application of s 377 of the Act. The result is that section 377(3)(c) applies to Beluga Chartering.
[104] I now explain my reasons for arriving at these conclusions.
Scope of s 350(2) – meaning of the word “companies”
[105] I set out s 350(2):
[106] Section 350(2) comprises two limbs. The word “companies” is used once in each limb, as underlined above. For consistency, the word “companies” should obviously be ascribed the same meaning in both limbs unless there is a compelling reason not to.
[107] The word “company” in the Act does not always mean “Singapore company” (see [44] to [61] above). What “company” or its plural means in any particular provision is in every case a question of context. To understand in context what “companies” means in s 350(2), I must turn to the origins of that section. Doing so shows that the use of “companies” is one of those occasions when company simply means “legal person”.
[108] Section 350(2) is derived from s 314 of the 1961 Act which is in turn derived from s 404 of the 1948 Act. I therefore start with s 404 of the 1948 Act.
[109] The structure of Parts X and XI of our Act are modelled on the structure of Parts IX and Part X of the 1948 Act respectively. Section 404 of the 1948 Act is found in Part IX of that Act and reads as follows:
[110] I make two points. The first limb of s 404 specifically refers only to the preceding provisions of the 1948 Act. This is not surprising. There were no insolvency provisions in any subsequent part of the 1948 Act. The second point is that the second limb of s 404 qualifies the second use of the word “companies” by following it with the words “formed and registered under” the 1948 Act. This is only an apparent tautology. Section 455 of the 1948 Act contained the same definition of “company” as our Act, with editorial changes, and was subject in the same way to a contrary context. By these additional words, the second limb of s 404 made clear that that Division did not preclude – in the liquidation of an unregistered company – the availability to the court or a liquidator of powers and discretions made available in the insolvency of locally-incorporated companies. If the 1948 Act had intended the word “companies” in the first limb to be confined as in the second limb, it would have followed the first use of the word “companies” by the same limiting phrase as appears in the second limb. But the 1948 Act did not do that. That provides a clear indication and a contrary context. “Companies” in the first limb of s 404 of the 1948 Act simply meant legal persons.
[111] Section 404 of the 1948 Act is the base for s 314(2) of the 1961 Act. Section 314(2) is found in Part X of the 1961 Act and reads as follows:
[112] Again, I note two points: s 314(2) deliberately broadened the language to refer to any insolvency provision wherever appearing in the 1961 Act, and indeed in the whole of the Victorian statute book. This again is not surprising: unlike the 1948 Act, the 1961 Act did contain insolvency provisions in subsequent provisions, namely s 352(3) of the 1961 Act, the precursor of our section 377(3). Because s 352(3) of the 1961 Act is capable of applying only to foreign companies, this broadening of the scope of s 314(2) reinforces the view that it – like s 404 of the 1948 Act – intended the first use of the word “companies” to mean simply “legal persons” and not just locally-incorporated companies.
[113] The second point is that s 314(2) of the 1961 Act differs from s 404 of the 1948 Act because it deliberately removed the modifying phrase “formed and registered under this Act” from the second use of the word “companies”. The effect of this deliberate deletion is to assimilate the meaning of the second use of the word “companies” in this section with the first use. So the consequence of this deletion is that “companies” was intended simply to mean “legal persons” in the second limb of s 314(2) as well.
[114] Section 350(2) of our Act follows precisely the wording of s 314(2) of the 1961 Act, subject only to editorial amendment. In my view, that indicates that our legislature intended our s 350(2) to have the same scope as s 314(2) of the 1961 Act. “Companies” means “legal persons” on both occasions in section 350(2).
[115] I am fortified in this interpretation by noting the effect of a contrary interpretation in the case of the liquidation of a foreign company registered under s 368 of the Act. It is common ground that that company can be placed in liquidation only under Division 5 of Part X. It is also common ground that in its liquidation, s 377(3)(c) would apply with full force. But if s 350(2) operates positively to preclude all of s 377 from applying to a liquidation under Division 5 of Part X simply because s 377 is not a provision which relates to the liquidation of Singapore companies, then s 377(3)(c) could not apply even to the liquidation of a foreign company which had registered under s 368. That cannot have been the legislative intent. And no party before me has suggested that it was.
Scope of s 350(2) in Division 5 of Part X – two limbs
[116] But even if I am wrong in the interpretation of “companies” in s 350(2), it is my view that the first limb of s 350(2) does not operate to exclude provisions which fall outside its scope from applying to a liquidation under Part 5 of Division X. Section 350(2) comprises two limbs. The second limb is phrased in the positive. Its effect is positively to permit all powers and discretions falling within its scope to apply in the liquidation of an unregistered company. The first limb of s 350(2), by contrast, is phrased in the negative. It simply provides that no provision in Division 5, by the fact alone of its existence, precludes a provision outside Division 5 from applying to the liquidation of an unregistered company. Unlike the second limb of s 350(2), the first limb does not operate positively to apply to the liquidation of an unregistered company those provisions that are within its scope. Nor does it operate positively to preclude those provisions that are outside its scope from applying to the liquidation of an unregistered company. Therefore, it is not correct to say that s 350(2) positively precludes a provision which falls outside the scope of the first limb of s 350(2) from applying to the liquidation of an unregistered company by that fact alone.
[117] So even if the word “companies” is read as meaning only Singapore companies, the only consequence is that s 350(2) fails expressly to provide that nothing in Division 5 of Part X of the Act precludes insolvency provisions such as s 377 of the Act from applying to the winding up of a foreign company under Division 5 of Part X. That does not carry the necessary implication that something in Division 5 does preclude s 377 from applying. So on that ground alone, s 377 may apply to the liquidation of a foreign company under Division 5 of Part X however one interprets “companies” in s 350(2).
[118] The question then arises: is there anything else which prevents s 377 from applying to the liquidation of a foreign company under Division 5 of Part X?
Difficulties in interpreting s 365
[119] On its face and looked at in isolation, s 377 is in absolute terms and is wide enough to apply to a foreign company such as Beluga Chartering. Given my finding that nothing in s 350(2) on its proper construction prevents section 377 from applying to a foreign company, that is sufficient to lead to the result that s 377 applies to Beluga Chartering.
[120] I must, however, consider s 365 of the Act. That section appears at the beginning of Division 2 of Part XI of the Act and provides as follows:
[121] Section 365 is commonly interpreted as setting a condition precedent for the application of s 377. So, in RBG (at [25]), counsel for the creditor conceded that s 377 did not apply to a foreign company which was not registered under section 368. As a result, arguments as to the construction of s 365 were not addressed before Woo Bih Li J.
[122] The condition-precedent interpretation has startling consequences. To start with, it means that s 365 creates a circularity. To put it simply: on this interpretation, s 365 provides that all of the sections of Division 2 of Part XI – including s 368 – apply only to a foreign company which complies with s 368. Only a company which registers under s 368 is obliged to register under s 368. How can that be right? Even if we dismiss this circularity by saying that pedantic quibbles over semantics must give way to clear legislative intent, there is a second, larger consequence.
[123] The condition-precedent interpretation creates a huge loophole in Division 2 of Part XI. It means that all of Division 2 of Part XI – including s 386, the penalty provision – cannot apply to a foreign company unless it registers under s 368. So a company cannot be prosecuted for failing to register under s 368 unless it has registered under s 368. That cannot have been the legislature’s intent.
[124] In the context of s 377, the condition-precedent interpretation leaves out of the scope of s 377 of the Act foreign companies to which the legislature clearly intended s 377 to apply. On this interpretation, s 377 does not apply to a foreign company which establishes a place of business in Singapore or which carries on business in Singapore but which at no time – whether before or after doing either – registers under s 368. Did the legislature really intend to exempt that foreign company from all of Division 2 of Part XI including s 377? It could not have intended that. Why would the legislature have intended to withdraw the benefit of s 377 from the creditors of a foreign company simply because the foreign company carried on business in Singapore in complete and unremedied breach of its obligation to register under s 368? And this loophole is so clear that it cannot be resolved by any amount of purposive interpretation of the qualifying condition in s 365.
[125] In RBG, Woo J found a practical resolution to at least part of these difficulties. Woo J acknowledged that the condition-precedent interpretation conceded before him to be correct led to the second difficulty I have identified. He arrived at a practical solution, holding at [31] that a foreign company which establishes a place of business or carries on business in Singapore but which fails to register under s 368 remains nevertheless under a continuing obligation to register under that section. Once it complies and registers, it becomes subject to s 377. But it is not at all clear how a continuing obligation can arise at all given the circularity between s 365 and s 368. And even Woo J accepted that his practical solution was only a partial solution. It did not deal at all with the case of a foreign company which is obliged to register but never registers at all. This loophole clearly troubled him. Thus, Woo J said at [64]: “I accept that there is some merit in the argument that a distinction, in the context of the payment of unsecured creditors, should not be drawn solely on the basis of registration of the insolvent company.”
[126] These difficulties can all be resolved, but at a price. We can interpret s 365 as not setting a condition precedent but as simply describing one class of foreign companies to which Division 2 of Part XI applies. The price is that this interpretation of s 365 takes it from being underinclusive to being overinclusive. It applies s 377 to a class of foreign companies which the legislature arguably never intended it to apply to: a foreign company which neither has a place of business nor carries on business in Singapore.
[127] I will show at [128] to [148] below that s 365 need not be interpreted as a condition precedent for the application of the provisions of Division 2 of Part XI. To achieve this, I will rely on section 365’s legislative history and a textual analysis of s 365. The overinclusiveness is not a counterargument to this interpretation. The problem of overinclusiveness manifests itself only in relation to s 377(3)(c). Insolvency law holds the solution to that problem.
The history of s 365
[128] The modern precursor of section 365 of the Act is section 406 of the English Companies Act 1948. The equivalent of a “foreign company” in the 1948 Act is an “oversea company”. Section 406 as enacted reads as follows:
[129] I make three observations about section 406 of the 1948 Act. First, section 406 did not on its face establish a condition precedent for the application of sections 407 to 414 of that Act. It did not say that those 8 sections shall apply only to oversea companies. The second point is that none of the conditions set out in section 406 depended on any other section of the 1948 Act. There could be no circularity. Finally, and in any event, sections 407 to 414 all have to do with, and only with, obligations to do with or arising from registration. Those sections are not cross-referenced from anywhere else in the 1948 Act. So it did not matter whether section 406 did or did not create a condition precedent. Section 406 was the only gateway into ss 407 to 414. And those sections had no meaning outside the context of oversea companies obliged to register under the 1948 Act.
[130] Section 406 of the 1948 Act was the model for section 344 in Division 3 of Part XI of the 1961 Act. Section 344 appeared at the beginning of Division 3 of Part XI and provided as follows:
[131] I make three observations about s 344. First, unlike s 406 of the 1948 Act, it attached the word “only” to the condition which it set out. The word must have been inserted deliberately and must be given a meaning. It made s 344(1) a condition precedent. Second, s 344 of the 1961 Act was followed by s 346 of the 1961 Act which required every foreign company to register within one month after it established a place of business or commenced to carry on business within Victoria. But s 344 made no reference to s 346. There was no circularity. The only condition which s 344 imposed on the application of s 346 was that the foreign company either had a place of business in Victoria or carried on business in Victoria. The third observation is that – unlike ss 407 to 414 of the 1948 Act – Part XI of the 1961 Act dealt with registration and insolvency. So s 344 was intended to and did function as a condition precedent to the application of every one of the provisions of Division 3 of Part XI in the 1961 Act, whether dealing with registration or with insolvency. It was if – and only if – the condition in s 344 was satisfied that any of the provisions of Division 3 of Part XI of the 1961 Act applied to a particular foreign company.
[132] Section 344 of the 1961 Act was the model for s 329 of our Act. In 1967, s 329 provided as follows:
[133] Section 346 of the 1961 Act was the model for s 332 of our 1967 Act. In 1967, s 332 provided as follows:
Sections 329 and 332 as enacted in 1967 in our Act are identical to s 344 and 346 of the 1961 Act, save only for changes of an editorial nature.
[134] By adopting the language of s 344 of the 1961 Act – including its use of the word “only” – our s 329 made clear that it established a condition precedent to the application of all the provisions in Division 2 of Part XI. Those provisions applied to every foreign company which satisfied the condition in s 329 and to no other types of foreign companies. That condition precedent made sense in light of the conceptual sequence underlying s 332: first, a foreign company establishes a place of business or commences carrying on business in Singapore; second, the obligation under s 332 immediately binds the foreign company; and finally, the foreign company has one month to discharge that obligation and register under s 332. That condition precedent also made sense in that it required examining only whether the foreign company has a place of business or carries on business in Singapore, and not whether it had complied with its registration requirement. It was not circular.
[135] In 1984, s 54 of the Companies (Amendment) Act 1984 (Act 15 of 1984) amended s 332. After amendment, s 332 read as follows:
[136] A foreign company was now obliged to register under s 332 before it established a place of business or commenced carrying on business in Singapore. The Report of the Select Committee on The Companies (Amendment) Bill [Bill No. 16/83] preceded the 1984 Amendment Act. It does not record the reason for this change in the language. Presumably, the intention was to ensure that there was no longer a one-month window during which a foreign company could legally carry on business in Singapore without being registered. By reason of the change, the obligation to register bound a foreign company at an earlier point in time in the conceptual sequence: at a time when it neither had a place of business nor carried on business in Singapore. So the sequence envisaged by the amended s 332 was: first, the obligation under s 332 binds a foreign company intending to establish a place of business or carry on business in Singapore; second, the foreign company complies with its obligation under s 332; and finally, the foreign company actually establishes a place of business or commences to carry on business in Singapore.
[137] But when s 332 was amended in this way, s 329 was not amended. It remained in the form set out in [132] above. This must have been due to oversight. But it caused an immediate and serious problem. The condition in s 329 was still drafted as a condition precedent. And it still governed the application of the entirety of Division 2 of Part XI. That meant that it continued to govern the registration obligation under s 332. But at the point in time when a foreign company was obliged to register under the new s 332, the foreign company had neither established a place of business in Singapore nor commenced carrying on business in Singapore as required by the unamended s 329. The unamended condition precedent in s 329 meant that the entirety of Division 2 of Part XI, including the registration obligation itself, did not apply to the very foreign companies to which it was intended to apply. Section 332 would never operate as intended.
[138] Division 2 of Part XI was next amended in 1987. This set of amendments originated in the Companies (Amendment) Bill (Bill No. 9 of 1986). By the time of the 1986 Bill, s 329 of the Act had been renumbered as s 365. Section 332 had been renumbered as s 368.

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Beluga Chartering GmbH (in liquidation) v Beluga Projects (Singapore) Pte Ltd (in liquidation) and another (Deugro (Singapore) Pte Ltd, non-party)

Laws this judgment relies on

Grounds of decision

Introduction

Beluga Chartering

This application

The applicants

Beluga Asia and Beluga Singapore become judgment creditors of Beluga Chartering

The parties’ positions on the application

The parties’ submissions summarised

History of our statutory insolvency scheme

Universalism and territorialism

The history of our legislation

English authorities remain of relevance in interpreting our Act

English common law remains relevant

Conclusion

Some basic but necessary definitions

Definition of “company”

Singapore-incorporated non-company

Definition of “foreign company”

Definition of “unregistered company”

The statutory insolvency scheme under the Act

Liquidation of a Singapore company

Liquidation of an unregistered company

Division 5 of Part X does not enact or envisage the ancillary liquidation doctrine

Division 5 of Part X applies to all foreign companies

The insolvency provisions of Division 2 of Part XI

Does section 377(3)(c) apply to the liquidation of Beluga Chartering?

Scope of s 350(2) – meaning of the word “companies”

Scope of s 350(2) in Division 5 of Part X – two limbs

Difficulties in interpreting s 365

The history of s 365