In a split decision, the three-judge Court of Appeal in Singapore has ruled that there was a breach of natural justice in the making of bankruptcy-related orders against a businessman and his family by an Indonesian court.
These orders - against Mr Paulus Tannos, his wife Lina Rawung and their children Pauline and Catherine - were earlier recognised by the High Court of Singapore.
The four are Indonesians, but hold Singapore permanent residency and reside here.
The High Court decision was eventually overturned by the apex court, with Chief Justice Sundaresh Menon and Judge of Appeal Tay Yong Kwang holding that the family had not been given a fair opportunity to contest the court proceedings in Indonesia.
However, Justice Woo Bih Li disagreed, finding that they had earlier known of the court proceedings but chose not to attend.
Indonesian media reports state that Mr Tannos is allegedly a suspect in an ongoing corruption case in his home country that involves an Indonesian government project on the country's electronic national identity cards.
According to the judgment by the apex court dated Aug 27, the businessman is a majority shareholder of Indonesian company Megalestari Unggul (MLU).
In 2011, MLU was granted a loan of 200 billion rupiah (S$18.5 million) by another Indonesian company, with the Tannos family allegedly the guarantors of the loan.
MLU was unable to repay the loan in 2012. The debt was eventually assigned to a third Indonesian company - Senja Imaji Prisma (SIP) - and two individuals.
In December 2016, SIP began legal proceedings in Indonesia against MLU and the Tannos family over the debt, urging the court to make Penundaan Kewajiban Pembayaran Utang (PKPU) pre-bankruptcy orders against them.
Under Indonesian law, a PKPU order temporarily suspends the repayment obligations of a debtor so that it can propose a loan restructuring plan to its creditors.
SIP subsequently attempted to serve notice of the proceedings to the Tannos family at their registered address in Indonesia, but the delivery failed due to an "incomplete address", according to the records of the Indonesian courier company.
The proceedings were also advertised in an Indonesian newspaper with limited circulation.
The orders were later issued in the family's absence on Jan 9, 2017.
However, the family's lawyers attended subsequent meetings with the creditors, claiming that the family had not received any notice of the pre-bankruptcy proceedings, among other things.
As the meetings did not result in a successful loan restructuring plan, the Indonesian court later pronounced MLU insolvent and the Tannos family bankrupt.
It also appointed individuals to administer the insolvency process and as receivers and administrators of the Tannos family's estate, which includes property in Singapore.
The orders were recognised by the High Court of Singapore in January 2018, after an application by the receivers.
After failing to get the High Court to set aside its earlier recognition of the Indonesian court orders, the family appealed to the apex court in Singapore, claiming there were pending appeals and reviews before the Supreme Court of Indonesia.
The family also maintained that they had learnt of the court proceedings against them in Indonesia only after the orders were advertised in two major Indonesian newspapers.
The orders by the Indonesian court were therefore obtained in "breach of natural justice", they argued through their lawyers - Senior Counsel Philip Antony Jeyaretnam and Lau Wen Jin.
In their judgment, the Chief Justice and Justice Tay said that it would be illogical for the family to have not appeared in court to contest the making of the PKPU orders against them if they had earlier learnt about the proceedings.
"Indeed, their conduct at the creditors' meetings and their subsequent efforts to mount an appeal and seek review suggested that they were perfectly committed to seeking to vindicate their rights before the Indonesian courts but were left with no avenue to do so," wrote the Chief Justice, who delivered the majority decision.
Both the Chief Justice and Justice Tay also said that the Court of Appeal, in deciding whether the Indonesian court orders were made in accordance with the requirements of natural justice, is not bound by the views of the Indonesian court.
"As the (court orders) were to be recognised in Singapore, it is for the Singapore court to be satisfied on the evidence that the manner in which the orders had been obtained complied with the core principles of natural justice," wrote the Chief Justice.
