Bajaj v. Ueda: Setting Aside Statutory Demand for Unaccrued Debts
In Yashwant Bajaj v Toru Ueda, the Singapore Court of Appeal allowed an appeal, setting aside a statutory demand. The court held that debts allegedly arising from a qualified report by an independent accountant, appointed to resolve a dispute between Bajaj and Ueda, had not accrued. The court found that the assessor's calculations were not final and binding, as required by the settlement agreement, because the assessor himself stated that the numbers were subject to adjustments. The court also found that a sum of US$50,000 pursuant to clause 10 of the Settlement Agreement had likewise not been accrued as a debt.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal sets aside a statutory demand, holding that debts based on a qualified independent accountant's report had not accrued.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Yashwant Bajaj | Appellant, Plaintiff | Individual | Appeal Allowed | Won | |
| Toru Ueda | Respondent, Defendant | Individual | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Judge of Appeal | No |
| Chao Hick Tin | Senior Judge | Yes |
| Quentin Loh | Judge | No |
4. Counsels
4. Facts
- Mr. Bajaj and Mr. Ueda were partners in a fund management business.
- They were the sole directors and equal shareholders of Hachiman Capital Management (HCM).
- In September 2010, the parties decided to close the business of the Fund.
- In March 2013, Mr. Ueda commenced a suit against Mr. Bajaj.
- The parties entered into a settlement agreement on 19 August 2014.
- The settlement agreement stipulated that an independent accountant would calculate certain values.
- The independent accountant issued a qualified opinion, stating that the values were subject to adjustments.
- Mr. Ueda served a statutory demand on Mr. Bajaj demanding payment of debts under the Settlement Agreement.
5. Formal Citations
- Yashwant Bajaj v Toru Ueda, Civil Appeal No 121 of 2018, [2019] SGCA 69
6. Timeline
| Date | Event |
|---|---|
| Parties decided to close the business of the Fund and entered into an agreement on the division of the business assets. | |
| Mr. Bajaj resigned as a director of the TY entities. | |
| Mr. Bajaj resigned as a director of the HCM entities. | |
| Mr. Ueda commenced a suit against Mr. Bajaj. | |
| Parties entered into a settlement agreement. | |
| Parties signed a neutral evaluation agreement. | |
| Assessor finished his evaluation report. | |
| Amendment was released to correct a typographical error. | |
| Mr. Ueda’s solicitors wrote to Mr. Bajaj demanding payment of sums due under the Settlement Agreement. | |
| Mr. Ueda served a statutory demand on Mr. Bajaj. | |
| Assistant Registrar dismissed Mr Bajaj’s application to set aside the Statutory Demand. | |
| Judge upheld the Assistant Registrar’s decision and dismissed the appeal. | |
| Oral hearing before the Court of Appeal. | |
| Court of Appeal allowed the appeal and set aside the statutory demand. |
7. Legal Issues
- Accrual of Debt
- Outcome: The court held that the debts had not accrued as of the date of the statutory demand.
- Category: Substantive
- Sub-Issues:
- Validity of expert determination
- Interpretation of settlement agreement
- Effect of qualified opinion
- Related Cases:
- [2000] 1 SLR(R) 135
- [1991] BCC 471
- [2012] EWHC 343
- Setting Aside Statutory Demand
- Outcome: The court set aside the statutory demand.
- Category: Procedural
- Sub-Issues:
- Substantial dispute of debt
- Valid counterclaim, set-off, or cross demand
- Related Cases:
- [2002] 2 SLR(R) 31
- [2014] 2 SLR 446
- [2017] 5 SLR 402
- Interpretation of Contractual Terms
- Outcome: The court interpreted the settlement agreement to determine whether the assessor's calculations were final and binding.
- Category: Substantive
- Sub-Issues:
- Terms of reference for independent accountant
- Final and binding calculations
- Duty to cooperate
- Related Cases:
- [2006] 1 SLR(R) 634
8. Remedies Sought
- Payment of Debt
- Setting Aside Statutory Demand
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Bankruptcy Law
11. Industries
- Finance
- Fund Management
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Wong Kwei Cheong v ABN-AMRO Bank NV | High Court | Yes | [2002] 2 SLR(R) 31 | Singapore | Cited for the principle that the bankruptcy court is obliged to set aside a statutory demand if the debt is disputed on substantial grounds. |
| Mohd Zain bin Abdullah v Chimbusco International Petroleum (Singapore) Pte Ltd and another appeal | Court of Appeal | Yes | [2014] 2 SLR 446 | Singapore | Cited for the test to be applied when considering whether to set aside a statutory demand. |
| Ang Ai Tee v Resource Credit Pte Ltd | High Court | Yes | [2017] 5 SLR 402 | Singapore | Cited for the requirement of 'substantial' grounds in rule 98(2)(b) going beyond the standard of a mere triable issue. |
| Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd | High Court | Yes | [2006] 1 SLR(R) 634 | Singapore | Cited for the principle that an expert's decision can be reviewed if the expert has not complied with the terms of his appointment. |
| Geowin Construction Pte Ltd (in liquidation) v Management Corporation Strata Title Plan No 1256 | High Court | Yes | [2007] 1 SLR(R) 1004 | Singapore | Cited for the principle that an expert's decision can be reviewed if the expert has not complied with the terms of his appointment. |
| Sofia Shafi v Alexandra Rutherford | English Court of Appeal | Yes | [2014] EWCA Civ 1186 | England and Wales | Cited for the principle that where the court finds that the expert did not comply with the parties’ agreement, his or her determination would not be valid and enforceable. |
| Shorrock Ltd & Anor v Meggitt plc | Not Available | Yes | [1991] BCC 471 | England and Wales | Cited for the proposition that a qualified expert determination was not effective. |
| Khaled El Bishlawi and another v Minrealm Limited and others | English High Court | Yes | [2012] EWHC 343 | England and Wales | Cited for the proposition that a qualified expert determination was not effective. |
| LKM Investment Holdings Pte Ltd v Cathay Theatres Pte Ltd | High Court | Yes | [2000] 1 SLR(R) 135 | Singapore | Cited for the principle that a statutory demand is invalid if made in respect of a debt that had not accrued as of that date. |
| Wheeler, Mark v Standard Chartered Bank (Singapore) Limited | High Court | Yes | [2018] SGHC 205 | Singapore | Cited for the principle that rule 98(2)(d) only allows procedural or technical reasons to be raised with regard to non-compliance with rule 94. |
| Minster Trust Ltd v Traps Tractors Ltd | English High Court | Yes | [1954] 1 WLR 963 | England and Wales | Cited for the principle that ambiguous statements did not qualify as certificates, based on contractual construction. |
| Yashwant Bajaj v Toru Ueda | High Court | Yes | [2018] SGHC 229 | Singapore | Reference to the Judge’s decision in Registrar’s Appeal No 177 of 2018. |
13. Applicable Rules
| Rule Name |
|---|
| Bankruptcy Rules, r 94 |
| Bankruptcy Rules, r 97(1) |
| Bankruptcy Rules, r 98 |
| Bankruptcy Rules, r 98(2)(b) |
| Bankruptcy Rules, r 98(2)(e) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Bankruptcy Act (Cap 20) | Singapore |
| Bankruptcy Rules (Cap 20) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Statutory Demand
- Settlement Agreement
- Independent Accountant
- Qualified Opinion
- Accrued Debt
- Neutral Evaluation
- Terms of Reference
- Final and Binding
- Hachiman Capital Management
- Evaluation Report
15.2 Keywords
- bankruptcy
- statutory demand
- settlement agreement
- expert determination
- debt
- insolvency
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Bankruptcy | 90 |
| Insolvency Law | 90 |
| Statutory Demand | 70 |
| Contract Law | 60 |
| Arbitration | 30 |
16. Subjects
- Bankruptcy
- Contract Law
- Debt Recovery
- Expert Determination