Case Update: Lee Chen Seong Jeremy v Official Assignee [2018] SGCA 51 – Court of Appeal clarifies law on abandonment of property

Significance: Singapore Court of Appeal clarifies the law on abandonment of property. It was held that abandonment would be made out when there has been a unilateral relinquishment of a particular property, whether tangible or intangible. 

The Court held at [26] that abandonment would be made out when there has been a unilateral relinquishment of a particular property: Edward J Kearns v T A Dilleen (Inspector of Taxes) [1997] 3 IR 287 at 298; Saw Cheng Lim, “The Law of Abandonment and the Passing of Property in Trash” (2011) 23 SAcL J 145 at para 6.

The Court adopted the two-element test propounded by Professor Saw:

  • there must be an overt act of abandonment; and
  • a subjective intention to completely relinquish a property.

The two elements are intertwined – a subjective intention to abandon is to be established inferentially from the overt acts and conduct of the proprietor. Generally, the court should be slow to make any finding of abandonment except in the clearest of cases: Wong Seng Kwan v Public Prosecutor [2012] 3 SLR 12 at [22].

The Court also clarified at [21] that when a debtor becomes bankrupt, all provable debts owing by the debtor are converted from rights of action against the debtor to a right to share rateably (in competition with other unsecured creditors) in the distribution of the bankruptcy estate vested in the trustee for the bankrupt. The effect of the debtor’s bankruptcy is that the debtor is no longer obliged to pay creditors, and indeed, is disabled from doing so. Hence, if the bankrupt offered payment, creditors could not safely accept it, since at that stage their right is a right of proof against the estate and the only assets out of which it can be satisfied are assets that have vested in the trustee. What a creditor possessed after the debtor became bankrupt is a right to share in the bankrupt’s estate to the extent of the creditor’s rateable interest. This was a right of proof exercisable against the estate vested in the trustee, not the debtor. In this connection, it was unnecessary for the creditor’s purported election to waive the debt to be communicated to the bankrupt debtor. However, such a right of proof is an asset that is capable of being assigned or dealt with and can therefore pass to a third party: at [22].

On the facts, the Court found that the creditor company had abandoned its property in the right of proof. 

  • The creditor company’s directors made declarations to the effect that the company no longer had contingent assets and that all its assets had been cleared.
  • The accounts of the company filed when it made its application to be struck off the Register did not show this debt. 
  • The company showed willingness to write off the remaining debt on its books. This suggested that it could very well similarly have given up on (if it had not already) the possibility of a payout in respect of this particular debt.

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