KYEN RESOURCES PTE. LTD (IN COMPULSORY LIQUIDATION) & 2 Ors v FEIMA INTERNATIONAL (HONGKONG) LIMITED (IN LIQUIDATION)

[2024] SGCA 7 Court of Appeal 5 March 2024 • CA/CA 4/2023 ( CA/SUM 22/2023 ) • 34 min read

10 cases cited (5 SG, 5 foreign) Cited by 1 case

Outcome

Appeal dismissed

we dismissed the appeal and SUM 22. In respect of the appeal, there was no basis to challenge the claim in Feima’s proof of debt, and no reason to allow the Kyen Liquidators to account for the Crossclaims and reject Feima’s proof of debt on this basis.

Source: [2024] SGCA 7, Court of Appeal, decided 5 March 2024. Read directly from the judgment.

Key facts

Court	Court of Appeal
Decided	5 March 2024
Judges	Judith Prakash, Kannan Ramesh, Sundaresh Menon
Charges / claim	Insolvency Law, Res Judicata
Outcome	Appeal dismissed
Counsel	Allen & Gledhill LLP, Shook Lin & Bok LLP, Alexander Lawrence Yeo Han Tiong, Chan Ming Onn David, Edwin Teong Ying Keat, Fong Zhiwei Daryl, Lai Wei Kang Louis, Mo Fei

Source: [2024] SGCA 7, Court of Appeal, decided 5 March 2024 — eLitigation. Updated 25 June 2026.

Catchwords

Insolvency Law — Winding up — Proof of debt — Liquidators seeking to set-off crossclaims as a basis for rejecting proof of debt — Whether liquidators generally entitled to set-off all crossclaims in the proof of debt process Res Judicata — Applicable principles — Creditor seeking a stay of the appeal in Singapore — Whether res judicata arose in the decision of a liquidator of a foreign company which was pending an appeal in another jurisdiction

Practice Areas

Insolvency Law Res Judicata

Judges (3)

Judith Prakash Coram Kannan Ramesh Delivered Sundaresh Menon Coram

Counsel (8)

Allen & Gledhill LLP Firm Shook Lin & Bok LLP Firm Alexander Lawrence Yeo Han Tiong Counsel Respondent Chan Ming Onn David Counsel Appellant Edwin Teong Ying Keat Counsel Respondent Fong Zhiwei Daryl Counsel Appellant Lai Wei Kang Louis Counsel Appellant Mo Fei Counsel Appellant

Parties (4)

Feima International (Hongkong) Ltd (In Liquidation) Respondent Kyen Resources Pte Ltd (in compulsory liquidation) Appellant Chan Kheng Tek Appellant Goh Thien Phong Appellant

Case Significance

Kyen Resources Pte Ltd (in compulsory liquidation) and others v Feima International (Hongkong) Ltd (In Liquidation) [2024] SGCA 7 was decided by the Court of Appeal on 5 March 2024, with Kannan Ramesh JAD delivering the grounds of decision of a coram that also comprised Sundaresh Menon CJ and Judith Prakash SJ. The matter arose from Civil Appeal No 4 of 2023 and Summons No 22 of 2023, in proceedings between the appellants Kyen Resources Pte Ltd, Chan Kheng Tek and Goh Thien Phong, and the respondent Feima International (Hongkong) Ltd, a foreign company in liquidation.

As framed by the catchwords, the judgment addressed two areas of insolvency law and procedure. The first concerned winding up and proof of debt, specifically whether liquidators are generally entitled to set off all crossclaims against an unsecured creditor's proof of debt where a set-off is not otherwise available. The second concerned res judicata, including whether a creditor was entitled to a stay of the Singapore appeal and whether res judicata arose from the decision of a liquidator of a foreign company that was pending appeal in another jurisdiction. The appellants were represented by Shook Lin & Bok LLP and the respondent by Allen & Gledhill LLP. The judgment cited four statutes, including the Insolvency, Restructuring and Dissolution Act, the Companies Act and the Bankruptcy Act.

Summary

SUPREME COURT OF SINGAPORE

5 March 2024

Case summary

Kyen Resources Pte Ltd (in compulsory liquidation) and others v Feima International (Hongkong) Ltd (In Liquidation) and another matter [2024] SGCA 7

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Decision of the Court of Appeal (delivered by Justice Kannan Ramesh):

Outcome: The Court of Appeal dismissed an appeal against the decision of the General Division of the High Court (the “General Division”) to admit a proof of debt in the sum of US$32,079,540.97 and held that, where a set-off was not available, the liquidators of the first appellant could not account for the first appellant’s crossclaims against the respondent (the “Crossclaims”) in the proof of debt process in order to arrive at a net position on the respondent’s claim. The court also dismissed the respondent’s application to stay the appeal in favour of proceedings in the Hong Kong Special Administrative Region (“Hong Kong”), where the Crossclaims were asserted by the appellants by lodging a proof of debt in the respondent’s liquidation there. In doing so, the court set out its observations on the issues of res judicata and election raised in the stay application.

Pertinent and significant points of the judgment

• There was no precedent or policy that supported the position that liquidators had a general entitlement to account for a company’s crossclaims against its creditor when adjudicating the creditor’s proof of debt. To account for crossclaims in the proof of debt process, a liquidator must establish a permissible set-off: at [42].

• The doctrines of res judicata and election did not arise as the Crossclaims were properly asserted by the appellants before the Singapore and Hong Kong courts for different purposes and the proceedings were distinct in nature. In Singapore, the Crossclaims were asserted as a set-off and it was for the courts here to determine whether the set-off was permissible. In Hong Kong, the Crossclaims were asserted by the appellants as the respondent’s creditor, and it was for the Hong Kong courts to determine if the rejection of the first appellant’s proof of debt by the respondent’s liquidators was correct: at [63].

• The setting-off of the Crossclaims by the appellants were a matter of Singapore’s law and public policy. Any decision of the Hong Kong courts on the merits of the Crossclaims could not bind the court in these proceedings: at [64].

Background

1 The first appellant, Kyen Resources Pte Ltd (“Kyen”) was a company incorporated in Singapore. It was wound up on 5 August 2019 and the second and third appellants were appointed joint and several liquidators. The appellants are collectively termed the “Kyen Appellants”.

2 The respondent, Feima International (Hongkong) Ltd (“Feima”), was a company incorporated in Hong Kong. It was wound up on 31 July 2019 and two individuals were appointed as joint and several liquidators (the “Feima Liquidators”).

3 Kyen and Feima were members of a group of companies. Feima owned 86% of the shares in Kyen and shared common directors with Kyen. Also, under a Management and Administrative Services Agreement, Feima agreed to provide Kyen certain management and administrative support services.

4 On 2 September 2020, the Feima Liquidators lodged a proof of debt for US$49,355,996.30 which comprised various sums allegedly due from Kyen to Feima for goods sold and delivered by Feima to Kyen; and payments made by Feima on Kyen’s behalf.

5 Between September 2020 and June 2021, solicitors for the Kyen Liquidators and the Feima Liquidators exchanged correspondence. A key issue in the correspondence related to requests for evidence and information by the Kyen Liquidators on two matters. First, the sum claimed in Feima’s proof of debt. Second, a series of significant transactions between Kyen and various companies which were not members of the group (the “Third-Party Transactions”). On 18 March 2021, a list of questions was sent by the Kyen Liquidators to the Feima Liquidators concerning the Third-Party Transactions. The Feima Liquidators declined to answer those questions.

6 On 23 July 2021, the Kyen Liquidators rejected Feima’s proof of debt on alternative grounds. First, that Kyen’s alleged crossclaims (the “Crossclaims”) against Feima on the basis of the Third-Party Transactions exceeded the claim in Feima’s proof of debt. The Kyen Liquidators alleged that the Crossclaims were for “losses suffered by [Kyen] in [sic] certain transactions … between [Kyen], on the one hand, and [third-party companies], on the other, which ha[d] been caused and/or occasioned by [Feima]”. This was the primary ground. Second, that there was insufficient evidence to support the claim in Feima’s proof of debt to the extent of US$44,900,112.83. This was the secondary ground.

7 On 13 August 2021, Feima appealed the rejection of its proof of debt by Kyen to the General Division in HC/OS 828/2021 (“OS 828”).

8 OS 828 was heard by the Judge below (the “Judge”) on 6 October 2022 and judgment was delivered on 6 December 2022. The Judge allowed OS 828 in part and admitted Feima’s proof of debt to the extent of US$32,079,540.97, being the sum pursued by Feima before the Judge. On the primary ground, the Judge held that the Kyen Liquidators were not justified in rejecting Feima’s proof of debt as the Crossclaims involved complex disputes of fact. The Judge further held that the Crossclaims did not satisfy the requirements for an insolvency set-off, and that it was inappropriate to determine whether the Crossclaims were made out as there was no basis in the first place for a set-off. On the secondary ground, the Judge held that there was no need for “heightened scrutiny” of Feima’s proof of debt as there was nothing to trigger suspicion: the evidence presented by Feima supported the claim in its proof of debt to the extent of US$32,079,540.97.

9 Dissatisfied, the Kyen Appellants brought the appeal, which was initially scheduled to be heard in August 2023. However, on 14 July 2023, Feima filed CA/SUM 22/2023 (“SUM 22”) seeking a stay of the appeal. As things transpired, on 16 January 2023, following the Judge’s decision, the Kyen Liquidators lodged a proof of debt in Feima’s liquidation for the sum of US$159,308,190.27 based on the Crossclaims. Kyen’s proof of debt was rejected by the Feima Liquidators on 25 May 2023, and Kyen challenged the rejection in the Hong Kong Court of First Instance in HCCW 309/2018 filed on 28 June 2023 (the “HK Proceedings”). Feima’s principal argument in support of SUM 22 was that as a result of Kyen placing the Crossclaims before the Hong Kong courts by lodging the proof of debt and challenging its rejection in the HK Proceedings, it was inappropriate for the same issue to also be considered in the appeal.

10 However, in what was a reversal of Feima’s position that the appeal should be stayed, the parties informed the court on 10 October 2023 that they had consented to the HK Proceedings being heard after the resolution of SUM 22 and/or the hearing of the appeal. This rendered SUM 22 otiose. Nevertheless, it was relevant to understand the implications, if any, of the Crossclaims being an issue in both the appeal and the HK Proceedings. In the circumstances, the court directed that: (a) SUM 22 and the appeal be heard together on 9 November 2023, and (b) the parties address the court on the relevance, if any, of the Crossclaims being an issue in both the appeal and the HK Proceedings.

Decision of the court

11 The Kyen Liquidators were not entitled to account for the Crossclaims when adjudicating Feima’s proof of debt. The Kyen Appellants were in substance seeking to set-off the Crossclaims against Feima’s claim in order to reject Feima’s proof of debt, and their argument that an “accounting” in the proof of debt process was permissible should be correctly understood in that sense. However, the Kyen Liquidators were not entitled to account for the Crossclaims by way of an insolvency set-off, which was the only set-off that was raised, in the adjudication of Feima’s proof of debt. There was also no precedent or policy that supported the position that liquidators had a general entitlement to account for the company’s crossclaims against its creditor. To account for the company’s crossclaims in the proof of debt process, the liquidator must establish a permissible set-off: at [31], [38]–[42], [51], [55]–[56].

12 The court agreed with the Judge that, if the claim and the crossclaim were not disputed and a set-off was available, it was then a matter of simple arithmetic in setting-off the crossclaim against the claim to arrive at a net position on the claim. The court also agreed with the Judge that where the crossclaim was substantially disputed and factually complex, it might be inappropriate for the liquidator to summarily deal with it in the adjudication process. In such circumstances, the liquidator ought to seek directions from the court on the manner or mode by which the crossclaim should be resolved: at [53].

13 In view of the court’s conclusion that the Kyen Liquidators were not entitled to exercise a set-off on the basis of the Crossclaims, it was not necessary to decide whether the doctrines of res judicata and election prevented the Crossclaims from being pursued in Singapore. Nevertheless, the court observed that the doctrines of res judicata and election were not engaged as the Crossclaims were properly asserted before the Singapore and Hong Kong courts for different purposes and the proceedings were distinct in nature. In Kyen’s liquidation, the Crossclaims were asserted by the Kyen Liquidators as a set-off in the adjudication of Feima’s proof of debt. As Singapore was the seat of Kyen’s liquidation, it was for the courts here to determine whether the set-off was permissible. As regards Feima’s liquidation, the Crossclaims were asserted by Kyen as Feima’s creditor in the proof of debt process in Hong Kong. As Hong Kong was the seat of Feima’s liquidation, it was for the courts there to determine whether the rejection of Kyen’s proof of debt by the Feima Liquidators was correct: at [63].

14 The transnational nature of this dispute brought an added dimension to the analysis. The Kyen Liquidators’ decision to set-off the Crossclaims was a matter of Singapore’s law and public policy. Therefore, any decision of the Hong Kong courts on the merits of the Crossclaims could not bind the court in these proceedings: at [64].

15 The appeal and SUM 22 were dismissed, and the court fixed costs in favour of Feima at $50,000 inclusive of disbursements: at [66]–[67].

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.

What did Kyen Resources v Feima International [2024] SGCA 7 concern?

Decided by the Court of Appeal on 5 March 2024, the case concerned whether liquidators may set off all crossclaims when rejecting an unsecured creditor's proof of debt where set-off is unavailable, and whether res judicata arose from a foreign liquidator's decision pending appeal abroad.

Who were the parties and judges in [2024] SGCA 7?

The appellants were Kyen Resources Pte Ltd (in compulsory liquidation), Chan Kheng Tek and Goh Thien Phong; the respondent was Feima International (Hongkong) Ltd (In Liquidation). Kannan Ramesh JAD delivered the decision, sitting with Sundaresh Menon CJ and Judith Prakash SJ.

Which firms acted in Kyen Resources v Feima International ([2024] SGCA 7)?

Shook Lin & Bok LLP represented the appellants Kyen Resources, Chan Kheng Tek and Goh Thien Phong, while Allen & Gledhill LLP acted for the respondent Feima International (Hongkong) Ltd. The judgment cited four statutes, including the Insolvency, Restructuring and Dissolution Act.