ATTACHMENT OF DEBT AND CAD ORDER
Mitsui E&S Power Systems Inc v Neptun International Pte Ltd and another (DBS Bank Ltd, non-party) [2024] SGHCR 3 was an application by the Non-Party, DBS Bank Ltd (“DBS”), for the release of an attached debt from attachment on the basis that the Commercial Affairs Department (“CAD”) had directed DBS not to allow any dealings with the monies standing in Neptun International Pte Ltd’s (“Neptun”) account with DBS (“Account”) (“CAD Order”).
The Enforcement Order. The enforcement applicant, Mitsui E&S Power Systems Inc (“Mitsui”), obtained an enforcement order for monies in Neptun’s Account on 30 June 2023 (at [3]; [7]) under the Rules of Court 2021 (“ROC 2021”).
The Sheriff served DBS with a notice of attachment dated 12 July 2023 (“Notice of Attachment”) (at [7]).
DBS filed a notice of objection to object to the attachment by the Sheriff on 26 July 2023 (at [8]). The Sheriff directed that DBS apply to the Court for an order to release the attached debt (at [8]), which DBS duly did.
The CAD Order. DBS’s objection to the attachment of the monies in the Account was solely because of the CAD Order which it received on 10 January 2023 (at [9]).
The CAD Order was made pursuant to section 35(2)(b) of the Criminal Procedure Code 2010 (2020 Rev Ed) (“CPC”) and directed that DBS was not to “allow any dealings with (i.e. freeze) the moneys [in the Account] … except with prior instruction of the Police” for the purposes of investigations (at [9]).
On this basis, DBS’s position was that no monies could be attached by the Notice of Attachment, either because (at [11]):
As a result of the CAD Order, there were no ‘debts due or accruing due’ from DBS to Neptun; or
Any debt due from DBS to Neptun was a ‘contingent debt’ which could not be attached.
Issue. The issue before AR Victor Choy was therefore whether the monies in Neptun’s Account could be attached notwithstanding the CAD Order (at [12]), which turned on (at [13]):
“(a) whether there was a debt due to Neptun from DBS ‘immediately or at some future date’ (which is the language used in O 22 r 2(2)(c) of the ROC 2021); and
(b) whether the monies in Neptun’s Account were a ‘contingent debt’.”
ROC 2014. AR Choy compared the provisions governing the attachment of debts under the ROC 2021 and the Rules of Court (Cap 322, 2014 Rev Ed) (“ROC 2014”) (at [16] – [17]).
O 22 r 2(2)(c) of the ROC 2021 provided for the attachment of “a debt which is due … whether immediately or at some future date or at certain intervals in the future” (at [16]). Whereas under O 49 r 1 of the ROC 2014, it was for “any debt due or accruing due …” (at [17]).
While the language used in both provisions was different, AR Choy agreed that “the law on attachment of debts under the ROC 2021 is in substance the same as the law on garnishee proceedings under ROC 2014” and was of the view that “O 22 is merely a simplification of O 49” (at [18]).
Attachable debts under O 22 of the ROC 2021. AR Choy then held that for a debt to be due “immediately or at some future date”, the key was that “there must be a present and existing obligation to pay a sum of money whether now or at some point in the future” (at [22]).
In other words, “it is essential that the relationship of creditor and debtor should exist between the enforcement respondent and the non-party…” (at [22]).
Non-attachable debts under O 22 of the ROC 2021. As for contingent debts, AR Choy held that they “do not exist until and unless the contingency or event that triggers their creation occurs” (at [23]).
Given this, contingent debts are therefore not attachable, as there is no obligation that can be attached until the contingency occurs.
Effect of the CAD Order. AR Choy thus held that it was “only if the CAD Order extinguished the debt owed by DBS to Neptun (i.e. Neptun and DBS are no longer in a creditor-debtor relationship or the ownership of the monies no longer belonged to Neptun)” that the monies in Neptun’s Account would not be attachable (at [28]).
After considering s 35(2)(b) of the CPC (pursuant to which the CAD Order was issued) (at [30] – [33]), AR Choy concluded at [34] that since “… the effect of the CAD Order is merely to temporarily prohibit the monies in the Account from being disposed of or dealt with and not to alter the existing legal relationship between DBS and Neptun, notwithstanding the CAD Order, the monies in the Account continue to be owned by Neptun (i.e. Neptun and DBS remain in a creditor-debtor relationship).”
DBS tried to argue that there was no actionable debt that Neptun could sue DBS for given the CAD Order (at [35]). This was rejected by AR Choy, who held that the CAD Order did not extinguish Neptun’s legal entitlement from being able to sue for the return of the monies even though practically, if such proceedings were commenced despite the CAD Order, such proceedings would likely be stayed (at [40]).
Hence, AR Choy held that there was property belonging to Neptun with DBS that was available for attachment (at [41]).
AR Choy also disagreed that “the ongoing investigations rendered the monies in the Account owed by DBS to Neptun a contingent debt” (at [42] – [51]). In this regard, AR Choy highlighted at [50] that “[a] contingent debt is one where the contingency must happen for there to be a debt. It is not one where the contingency happens for there not to be a debt.” (emphasis in original)
Thus, AR Choy dismissed DBS’s application and allowed the attachment of the debt to be maintained or held in abeyance pending the outcome of any potential disposal inquiry (at [52] – [59]), adding that this would be in line with the Ideals in the ROC 2021 in achieving a fair and practical outcome that suited the needs of the parties (at [60] – [63]).
In doing so, AR Choy considered the concerns of DBS (such as, e.g., the risk of having to pay the monies twice at [62]) versus the concerns of Mitsui (at [63]) in determining whether the outcome arrived at was a fair and practical one.
Conclusion. This decision confirms that the attachment of a debt under the ROC 2021 is in substance the same as what was under the ROC 2014. It also confirms what amounts to attachable debts and what contingent debts do not cover, as well as the importance of the Ideals under ROC 2021 in shaping the Court’s decision as well as the relief(s) granted.
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