Standard of review of a private trustee's determination of monthly contribution and target contribution
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Monthly Contribution and Target Contribution (MCTC)
Where an individual is adjudged a bankrupt,[1] a determination must be made of the bankrupt’s monthly contribution and target contribution in respect of the bankruptcy. The target contribution is the amount that a bankrupt must pay to the bankruptcy estate to become eligible for discharge from bankruptcy and, depending on whether the bankruptcy is a first or a repeat bankruptcy, is equal to 52 or 76 monthly contributions.[2] The monthly contribution is the amount to be paid by the bankrupt to the bankruptcy estate out of the bankrupt’s income, which may be varied or reduced.[3] The Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) (“IRDA”) provides for the factors that must be considered in determining the monthly contribution and target contribution.[4]
The procedure for the determination of the monthly contribution and target contribution is as follows. Within 21 days after the date of the bankruptcy order, the bankrupt must submit a statement of the bankrupt’s affairs in a prescribed form (“Statement of Affairs”).[5] The Statement of Affairs must contain the bankrupt’s assets; creditors, debts and other liabilities; current income from any source; current employment status and employment history; educational and vocational qualifications, age and work experience; members of the bankrupt’s family; and, the monthly expenses necessary for the maintenance of the bankrupt and thebankrupt’s family.[6]
Not later than 2 months after the date of submission of Statement of Affairs or, where the bankrupt is directed to submit supplementary information, the submission of the supplementary information, the bankrupt’s monthly contribution and target contribution in respect of the bankruptcy must be determined and a notice of determination served on the bankrupt and the creditors.[7] If a bankrupt or any or any creditor of the bankrupt is dissatisfied with the monthly contribution and target contribution, an application may be made to the Court within 21 days after the service of the notice of the determination for a review of the determination.[8]
Issue
What is the applicable standard of review in an application made under section 340 of the IRDA for the review of a private trustee’s determination of monthly contribution and target contribution?
What is the applicable standard of review in an application made under section 340 of the IRDA for the review of a private trustee’s determination of monthly contribution and target contribution?
Holding
In Haotanto Anna Vanessa v Fang Ching Wen Ted [2022] SGHC 216, the Singapore High Court held that the applicable standard of review in an application under section 340 of the IRDA for the review of a private trustee’s determination of monthly contribution and target contribution, is the perversity standard. Under the perversity standard, the question to be asked is whether no other private trustee would have done what the respondent had done; in other words, whether the private trustee’s decision was so absurd that no private trustee properly advised or properly instructing himself could have so acted.[9] Lack of good faith or abuse of process would be reason to interfere, but the court would not readily find that it is made out.[10] In this regard, section 340 of the IRDA predominantly sets out the procedural steps involved in an application for review and does not address the standard of review to be applied.[11] The determination of monthly contribution and target contribution is a function of the private trustee’s business and commercial judgment.[12]
In Haotanto Anna Vanessa v Fang Ching Wen Ted [2022] SGHC 216, the Singapore High Court held that the applicable standard of review in an application under section 340 of the IRDA for the review of a private trustee’s determination of monthly contribution and target contribution, is the perversity standard. Under the perversity standard, the question to be asked is whether no other private trustee would have done what the respondent had done; in other words, whether the private trustee’s decision was so absurd that no private trustee properly advised or properly instructing himself could have so acted.[9] Lack of good faith or abuse of process would be reason to interfere, but the court would not readily find that it is made out.[10] In this regard, section 340 of the IRDA predominantly sets out the procedural steps involved in an application for review and does not address the standard of review to be applied.[11] The determination of monthly contribution and target contribution is a function of the private trustee’s business and commercial judgment.[12]
Findings
On the facts of the case, the Singapore High Court found that the bankrupt had failed to be forthright and forthcoming with information.13 The determination of the private trustee, which was based on the information provided to him at the point he made his determinations, was not one that could not have been reached by any other trustee acting reasonably.[14]
On the facts of the case, the Singapore High Court found that the bankrupt had failed to be forthright and forthcoming with information.13 The determination of the private trustee, which was based on the information provided to him at the point he made his determinations, was not one that could not have been reached by any other trustee acting reasonably.[14]
Concluding Remarks
In Zhang Hong En Jonathan v Private Trustee in Bankruptcy of Zhang Hong’En Jonathan [2021] 4 SLR 139, the Singapore High Court applied the perversity standard in exercising its general supervisory jurisdiction under section 43 of the IRDA for a review of a private trustee’s decision to disallow a bankrupt from defending an action.[15]
The decision in Haotanto Anna Vanessa v Fang Ching Wen Ted [2022] SGHC 216 clarifies that the same standard of review applies in an exercise of the Court’s power under section 340 of the IRDA when reviewing a private trustee’s determination of the monthly contribution and target contribution to the bankruptcy estate.
This decision empowers private trustees to act in respect of the bankruptcy estate, and strengthens the ability of private trustees to exercise robust commercial and business judgment in the determination of matters relevant to the monthly and target contributions to the bankruptcy estate.
A copy of the judgment may be accessed at this link: https://www.elitigation.sg/gd/s/2022_SGHC_216.
In Zhang Hong En Jonathan v Private Trustee in Bankruptcy of Zhang Hong’En Jonathan [2021] 4 SLR 139, the Singapore High Court applied the perversity standard in exercising its general supervisory jurisdiction under section 43 of the IRDA for a review of a private trustee’s decision to disallow a bankrupt from defending an action.[15]
The decision in Haotanto Anna Vanessa v Fang Ching Wen Ted [2022] SGHC 216 clarifies that the same standard of review applies in an exercise of the Court’s power under section 340 of the IRDA when reviewing a private trustee’s determination of the monthly contribution and target contribution to the bankruptcy estate.
This decision empowers private trustees to act in respect of the bankruptcy estate, and strengthens the ability of private trustees to exercise robust commercial and business judgment in the determination of matters relevant to the monthly and target contributions to the bankruptcy estate.
A copy of the judgment may be accessed at this link: https://www.elitigation.sg/gd/s/2022_SGHC_216.
[1] Otherwise than on a debtor’s bankruptcy application.
[2] Section 273 of the IRDA.
[3] Section 273 of the IRDA.
[4] Section 339(2) of the IRDA.
[5] Section 332(1)-(2) of the IRDA. Under section 332(4) of the IRDA, the period for submission of the Statement of Affairs may be extended if the Official Assignee (or Private Trustee) thinks fit.
[6] Section 332(3) of the IRDA. See section 273 of the IRDA for definition of “administration date”.
[7] Section 339(1) of the IRDA.
[8] Section 340 of the IRDA.
[9] See Judgment at [25].
[10] See Judgment at [19].
[11] See Judgment at [22].
[12] See Judgment at [24].
[13] See Judgment at [26].
[14] Ibid.
[15] See Section 401 of the IRDA for the applicable disqualification of the bankrupt.
[2] Section 273 of the IRDA.
[3] Section 273 of the IRDA.
[4] Section 339(2) of the IRDA.
[5] Section 332(1)-(2) of the IRDA. Under section 332(4) of the IRDA, the period for submission of the Statement of Affairs may be extended if the Official Assignee (or Private Trustee) thinks fit.
[6] Section 332(3) of the IRDA. See section 273 of the IRDA for definition of “administration date”.
[7] Section 339(1) of the IRDA.
[8] Section 340 of the IRDA.
[9] See Judgment at [25].
[10] See Judgment at [19].
[11] See Judgment at [22].
[12] See Judgment at [24].
[13] See Judgment at [26].
[14] Ibid.
[15] See Section 401 of the IRDA for the applicable disqualification of the bankrupt.
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