Teunis Eigenraam v Ngng Pte Ltd [2022] SGHC 154

Introduction

This was an application for winding up that came before me. The Applicant sought the following prayers:

(a) That leave be granted to amend prayer 3 of the Originating Application;

(b) An order under s 264(4) of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) that the procedural irregularity in the winding up application did not render it invalid; and

(c) An adjournment for 6 weeks.

The Applicant had taken out the following advertisement in the Straits Times:

Rule 66(2)(b) of the Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020 (“Corporate Insolvency and Restructuring Rules”) states that the notice of the winding up application must “contain a note stating that any person who intends to appear on the hearing of the winding up application, either to oppose or support, must send notice of such intention to the applicant within the time and manner set out in rule 70”.

Rule 70 of the Corporate Insolvency and Restructuring Rules states that, among other things, a notice of intention to appear must either be served, or if delivered by post, reach the address of the applicant at least three clear working days before the day appointed for the hearing of the application.

The advertisement taken out by the Applicant did not comply with the requirements set out under Rule 66(2)(b) read with Rule 70 of the Corporate Insolvency and Restructuring Rules. It stated that the notice of intention to appear had to be served one clear working day, instead of the three clear working days provided for under the Corporate Insolvency and Restructuring Rules.

The Applicant therefore applied, under s 264(4) of the IRDA for an order that this procedural irregularity in the winding up application did not render it invalid. S 264(4) IRDA states:

The court may only grant an order under s 264(4)(a) if the following requirements under s 264(6) are met:

I also note that s 264(2) of the IRDA states:

It is clear from s 264(2) that procedural irregularities do not render a winding up proceeding invalid, unless the court, having taken the view that the irregularity has caused or may cause substantial injustice that cannot be remedied, declares the proceeding to be invalid. The question however, given the order the Applicant had sought, was whether the court should grant a declaration pursuant to s 264(4)(a) that the proceedings were not invalidated by the procedural irregularity. Here, the requirements set out in s 264(6) must be met – in other words, if I was of the view that if the error was a procedural one and that the Applicant had acted honestly, and I was satisfied that that error has not, or will not be likely to cause any substantial injustice, it would be appropriate to grant the order sought under s 264(4)(a).

In the present case, I was satisfied that it was appropriate to grant the order sought (see [1(b)] above) pursuant to s 264(4)(a) of the IRDA. I explain.

In considering whether the error was of a procedural nature, it is useful to look at what constitutes a procedural irregularity as defined under s 264(1) IRDA. As Justice Ang Cheng Hock (“Ang J”) noted in Mercantile & Maritime Investments Pte Ltd v Iceberg Energy Pte Ltd and another matter [2022] SGHC 64 (“Mercantile”) (at [81] – [82]):

In Mercantile (at [79]), Ang J rejected the argument that “[defects] associated with the [statutory demand] – namely, the timing at which it was served”, could be cured by the court pursuant to s 264 of the IRDA. There were “no requirements as to when a statutory demand must be served if it is to be relied on as the ground for a winding-up application pursuant to s 125(2)(a) of the IRDA” [emphasis in original] (Mercantile at [82]). Ang J therefore took the view that the defect with the statutory demand, specifically the timing at which it was served, could not be described as an irregularity to begin with, and thus s 264(2) of the IRDA was inapplicable.

The present case differed. Rule 66(2)(b) read with Rule 70 of the Corporate Insolvency and Restructuring Rules clearly set out the form requirements for advertisements. The form requirement was not complied with. I was therefore satisfied that the error here was of a procedural nature as it fell within the definition of a procedural irregularity under s 264(1)(b) of the IRDA.

I turn now to consider the remaining requirements set out in s 264(6)(a)(ii) and s 264(6)(c). I do not find it necessary to consider s 264(6)(a)(iii) because the use of the word “or” suggests that s 264(6)(a)(ii) and s 264(6)(a)(iii) are disjunctive requirements.

The form requirements for advertisements set out in Rule 66(2)(b) read with Rule 70 of the Corporate Insolvency and Restructuring Rules were meant to bring to the attention of those who intended to appear at a winding-up application of the requirements they had to fulfil.

Here, there were only two shareholders of the company – the Applicant and one Ms Van Malleghem. Both the Applicant and Ms Van Malleghem were also directors of the respondent company. There were no creditors. Counsel for the Claimant confirmed that they had been corresponding with the solicitors for Ms Van Malleghem, and that they were aware of these proceedings. Given that Ms Van Malleghem was the only other person who was likely to appear at the winding up proceedings, and that she had the benefit of legal counsel, it would have been likely that she would be properly advised that any notice of intention to appear had to be filed three clear days before the hearing, instead of the one clear working day as stated in the advertisement. It was therefore clear that no substantial injustice has been, or was likely to be caused to Ms Van Malleghem. It was also clear to me that the error here was an honest mistake. In the circumstances, I was satisfied that the requirements under s 264(6) of the IRDA were satisfied, and that the order sought under s 264(4)(a) should be granted.

Conclusion

I therefore granted the prayers sought, and allowed an adjournment for six weeks.