AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company)

• Court: Court of Three Judges (Singapore)
• Judge: Andrew Phang Boon Leong JCA
• Judgment Date: 29 November 2021
• Neutral Citation: [2021] SGCA 112
• Citation: [2021] SGCA 112
• Hearing Date: 14 October 2021
• Docket Number: Civil Appeal No 23 of 2021
• Published date: 02 December 2021
• Plaintiff Counsel: Lee Eng Beng SC, Chew Xiang and Cheong Tian Ci, Torsten (Rajah & Tann Singapore LLP)
• Defendant Counsel: Shobna Chandran, Yong Manling Jasmine and Muhammad Taufiq bin Suraidi (Tan Rajah & Cheah)
• Subject Matter: Arbitration,Arbitrability and public policy,Companies,Winding up,Liquidators' remuneration,Civil Procedure,Inherent powers,Jurisdiction,Functus officio

Steven Chong JCA (delivering the judgment of the court): Introduction

Typically, a liquidator’s remuneration and expenses are payable from the liquidated company’s assets. In some exceptional circumstances, however, a winding up order may be reversed and set aside. In such cases, the expenses associated with the liquidation of the company, including the liquidator’s fees, might have already been incurred. A few questions could then arise. Who is to bear these fees? Should it be the company, the petitioning creditor, or some other entity? Does the court have the power to order a party other than the company to bear these fees, and, if so, what is the juridical basis for the exercise of such a power? The latter question, in particular, is a novel one that has arisen for our determination in the present case.

The appellant, AnAn Group (Singapore) Pte Ltd (“AnAn”), was the defendant in HC/CWU 183/2018 (“CWU 183”). The respondent, VTB Bank (Public Joint Stock Company) (“VTB”), is an alleged creditor of AnAn, and it was the plaintiff in CWU 183 (ie, the petitioner). VTB sought, via CWU 183, a winding up order against AnAn.

VTB succeeded at first instance in CWU 183, and the General Division of the High Court (the “High Court”) made an order for AnAn to be wound up. This court reversed the High Court’s decision on appeal, in CA/CA 174/2018 (“CA 174”): see AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] 1 SLR 1158 (“AnAn (CA)”). We dismissed CWU 183 and held that there was a prima facie dispute over the debt that formed the basis of VTB’s winding up application. The dispute over the debt was to be resolved via arbitration: AnAn (CA) at [113] and [120].

Following our decision in AnAn (CA), AnAn filed HC/SUM 3902/2020 (“SUM 3902”) in CWU 183. This was its application for VTB to bear AnAn’s former liquidators’ and the liquidators’ solicitors’ (the “Liquidators”) remuneration and expenses (the “Liquidators’ fees”), in the light of our decision to reverse the winding up order. SUM 3902 was heard alongside HC/SUM 3569/2020 (“SUM 3569”), which was the Liquidators’ application to be discharged, and to claim their reasonable remuneration and expenses.

The judge below (the “Judge”) allowed SUM 3569 but dismissed SUM 3902. The Judge rejected AnAn’s primary contention that a liquidator’s remuneration is a form of “costs” under s 18(2) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”) read with para 13 of the First Schedule thereto (“Para 13”). The Judge’s decision is found in his oral judgment dated 25 February 2021 (the “Judgment”).

In the present appeal, CA/CA 23/2021 (“CA 23”), AnAn appeals against the Judge’s decision. It makes by and large the same arguments as it did below: that the court’s power to order costs under the SCJA encompasses the power to make orders in relation to the party who should bear the Liquidators’ fees. AnAn contends that we ought to exercise this power to make VTB liable for the Liquidators’ fees. VTB disagrees with AnAn’s interpretation of the SCJA, and also contends, amongst other things, that the issue of liability for the Liquidators’ fees should be determined in the arbitration, and not by the court.

After hearing counsel’s oral submissions on 14 October 2021, we reserved judgment. Having considered the parties’ respective positions, we dismiss CA 23.

Background and key events Factual background

On 3 November 2017, the parties entered into a global master repurchase agreement (“GMRA”) under which AnAn would sell VTB global depository receipts (“GDRs”) of shares in EN+ Group PLC (“EN+”). AnAn would then repurchase the GDRs from VTB at a later date at pre-agreed rates. This arrangement was “in substance a loan from VTB to AnAn”: AnAn (CA) at [4].

The GMRA contained the following arbitration agreement (the “arbitration clause”; see AnAn (CA) at [7]):

Any dispute arising out of or in connection with this Agreement, including any question regarding its subject matter, existence, negotiation, validity, termination or enforceability (including any non-contractual dispute or claim) (a ‘Dispute’), shall be referred to arbitration and finally settled on the following terms: (i) the arbitration shall be conducted in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) which Rules are deemed incorporated into this Clause; […]

Between 7 November 2017 and 6 April 2018, several events occurred which culminated in AnAn failing to restore and/or maintain sufficient collateral for the loan arrangement between the parties under the GMRA. This was an alleged breach of AnAn’s obligations under the GMRA, otherwise referred to as an event of default: see AnAn (CA) at [5]–[9]. Thus, on 12 April 2018, VTB sent a default notice to AnAn, designating 16 April 2018 as the early termination date of the GMRA. This notice alleged two events of default: AnAn (CA) at [10].

Procedural History

On 23 July 2018, VTB served on AnAn a statutory demand for the sum of US$170m. AnAn did not satisfy the demand within the three-week time limit: AnAn (CA) at [12]. On 17 August 2018, VTB filed CWU 183 seeking a winding up order against AnAn. AnAn resisted CWU 183 by disputing the debt owed to VTB: AnAn (CA) at [13].

VTB succeeded before the High Court, as the court applied the “triable issue” standard of review: see AnAn (CA) at [15]; see also the High Court’s decision in VTB Bank (Public Joint Stock Company) v AnAn Group (Singapore) Pte Ltd [2018] SGHC 250 at [58]. Consequently, the High Court ordered AnAn to be wound up. AnAn appealed vide CA 174.

On 7 April 2020, a five-judge coram sitting in this court reversed the High Court’s decision. We applied the prima facie standard of review, and found that “it [was] clear that there [was] a prima facie dispute in this case that would justify allowing the appeal and restraining the winding up application presented by VTB”: AnAn (CA) at [101]. We considered it appropriate to dismiss, and not stay, CWU 183: see AnAn (CA) at [113]. AnAn was therefore not wound up.

On 8 May 2020, the Liquidators filed CA/SUM 68/2020 to this court, seeking to be paid their remuneration and expenses out of the assets of AnAn, such remuneration and expenses having been incurred in the course of AnAn’s aborted liquidation. Then, on 23 June 2020, AnAn filed CA/SUM 74/2020 (“SUM 74”), seeking an order for VTB to bear all the remuneration and expenses incurred by the Liquidators, and/or for VTB to indemnify AnAn if AnAn were held liable for the same. On 23 July 2020, we decided that both summonses ought to be made to the High Court in the first instance and made no order accordingly.

On 13 August 2020, the Liquidators filed SUM 3569 to the High Court. Therein, they sought several prayers: for their expenses between 24 August 2018 and 6 April 2020 to be paid out of the assets of AnAn (“Prayer 1”); for AnAn to bear their expenses incurred on and after 7 April 2020, in respect of the handing over of AnAn’s affairs to AnAn (“Prayer 2”); for themselves to be discharged from all liability in respect of any act done or default made by them in the administration of AnAn’s affairs (“Prayer 3”); and for costs.

Subsequently, Prayers 1 and 2 above were amended with the court’s leave, pursuant to an application by the Liquidators on 2 November 2020. The amended prayers are captured at [2] of the Judgment, as follows: (a) The remuneration properly incurred by the Former Liquidators (the ‘Liquidation Remuneration’) for the period from 24 August 2018 to 6 April 2020 (the ‘Liquidation Period’) is to be paid out of the assets of the Company, such Liquidation Remuneration to be agreed if not taxed. (b) The disbursements properly incurred by the Former Liquidators (the ‘Liquidation Disbursements’) for the Liquidation Period are to be paid out of the assets of the Company, such Liquidation Disbursements to be agreed if not taxed. (c) The remuneration properly incurred by the Former Liquidators on and after 7 April 2020 in respect of the handing over of the Company’s affairs to the Company (the ‘Handover Remuneration’) is to be paid by the Company to the Former Liquidators, such Handover Remuneration to be agreed if not taxed. (d) The disbursements properly incurred by the Former Liquidators (the ‘Handover Disbursements’) on and after 7 April 2020 in respect of the handing over of the Company’s affairs to the Company are to be paid out of the assets of the Company, such Handover Disbursements to be agreed if not taxed.

[emphasis in original]

For convenience, we will from here on refer to these amended prayers as “Prayers 1 and 2”.

On 9 September 2020, AnAn filed SUM 3902, seeking an order that VTB is liable to bear all the expenses and remuneration properly incurred by the Liquidators (inclusive of both Prayers 1 and 2 of SUM 3569), and/or indemnify AnAn for any sums paid by AnAn pursuant to SUM 3569. AnAn cited the following as the grounds of its application in SUM 3902:

The grounds of the application are: 1. Section 268(3)(c) of the Companies Act (Cap. 50); 2. Section 18(1) of the Supreme Court of Judicature Act (Cap. 322); 3. Order 92 rule 4 and Order 92 rule 5 of the Rules of Court (Cap. 322) and/or the inherent jurisdiction of the Court; …

The two summonses were heard on 19 October 2020, and the Judge also considered the parties’ (and the Liquidators’) further submissions filed on 2 November 2020. The Judge issued the Judgment on 25 February 2021.

Decision below

The Judge granted Prayers 1 and 2 of SUM 3569. The Liquidators were entitled to “be paid both their reasonable remuneration and expenses out of the assets of [AnAn]”: Judgment at [7]. This included the “Handover” remuneration and disbursements. That is, for the period beginning from 7 April 2020 onwards, “[t]o the extent that the Former Liquidators were acting in accordance with...