Singapore-based Fustar Chemicals Pte Ltd owes FCL (Hong Kong) a debt of $614,560.71. Mr Ng Cheong Ling owns FCL (Hong Kong) while Mdm Wong Ser Wan owns the Singapore entity.
The Singapore firm came under voluntary liquidation in 2004, mired by a matrimonial dispute between them. Mdm Wong appointed Ms Ong Soo Hwa to be the liquidator.
Ms Ong rejected the existence the debt on the basis of absence of primary documents even though secondary documents such as audit confirmations and “qualified” audited accounts were submitted.
The dispute went to court.
The High Court agreed with Ms Ong’s decision not to admit the debt. The Court of Appeal, led by Justice VK Rajah, disagrees and overturns the earlier decision on the following grounds:-
- “weight should be given to the fact that the accounts in question have been audited’ and there was no evidence to conclude that the audited accounts may be inaccurate or incorrect.”
- “It must be obvious to anyone with accounting background that the doubtfulness about the collectibility of a debt by a creditor has no effect on a legal obligation to make payment by the debtor”
Justice VK Rajah expressed stern words on Ms. Ong‘s performance as a liquidator.
- “A liquidator must not only act independently, but be seen to be independent.” She is seen to be biased in favour of her appointers.
- Though the accounts were qualified by auditors, the debts are still part of the audited accounts of the company as the accounts were approved by the directors and shareholders at annual shareholders’ meetings.
As punishment, The Court of Appeal told Ms Ong that she can only get her fees after all the creditors have been paid.