Anan Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co)
|Sundaresh Menon CJ
|23 July 2019
| SGCA 41
| SGCA 41
|Court of Appeal (Singapore)
|26 July 2019
|Civil Appeal No 174 of 2018 (Summons No 33 of 2019)
|Lee Eng Beng SC and Chew Xiang (Rajah & Tann Singapore LLP)
|Philip Antony Jeyaretnam SC, Shobna d/o V Chandran, Lee Chia Ming, and Ashwin Nair Vijayakumar (Dentons Rodyk & Davidson LLP)
|Civil Procedure,Appeals,Adducing fresh evidence on appeal
|24 May 2019
It would be stating the obvious that the quality of evidence adduced in any given case will have a material if not a critical bearing on its outcome. Cases are fought and more importantly decided on the basis of the evidence before the court. For this reason, the common law has developed rules and exceptions for the admission of fresh evidence following a trial or a hearing on the merits in order to balance the importance of finality in litigation and the proper and fair administration of justice.
Not infrequently, applications to introduce new evidence take place following a change of counsel. New arguments are raised for the appeal and quite often, such new arguments require fresh evidence to be adduced. Even though such fresh evidence might have been reasonably available to the parties for the hearing below, it was overlooked simply because it was not relevant for the purposes of the arguments which were pursued below. The case before us was precisely one such case and the rule in
We heard and allowed the application on 24 May 2019 with brief oral grounds. In our view, the rule in
It is necessary to set out the background facts that gave rise to the present application as the relevance of the new evidence sought to be adduced can only be properly appreciated in that context.The relationship between the parties
The appellant in the substantive appeal and the applicant in this summons is Anan Group (Singapore) Pte Ltd (“Anan”), a Singapore holding company. The respondent in both the substantive appeal and this summons is VTB Bank (Public Joint Stock Company) (“VTB”), a state-owned Russian bank. On 3 November 2017, Anan and VTB 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+”) and then repurchase the GDRs from VTB at a later date at pre-agreed rates. The pre-agreed rates that Anan would need to pay VTB at the date of repurchase amounted in essence to the original purchase price paid by VTB plus interests and other costs. Thus, it was clear that despite the structure of the transaction as a sale and repurchase, this was in substance a loan from VTB to Anan.
Under this arrangement and according to the GMRA, Anan was under an obligation to maintain sufficient collateral, with the level of collateral being measured by an indicator known as the Repo Ratio. The Repo Ratio is calculated based on the purchase price of the GDRs under the GMRA plus accrued interest, divided by the prevailing value of the GDRs.1 Under the GMRA, Anan was required to maintain the Repo Ratio at a level below what is known as the Margin Trigger Repo Ratio of 60%, failing which VTB could exercise its contractual right to call on Anan to top up the amount of collateral.2 Anan was also under an obligation to maintain the Repo Ratio at a level below what is known as the Liquidation Repo Ratio of 75%. The calculation of whether the Repo Ratio rises above the Margin Trigger Repo Ratio of 60% or whether it rises above the Liquidation Repo Ratio of 75% differs slightly in that the latter takes into account various additional costs. Failure to top up the requisite amount of collateral when the Repo Ratio rises above the Margin Trigger Repo Ratio of 60% constitutes an event of default under the GMRA,3 as does the situation where the Repo Ratio rises above the Liquidation Repo Ratio of 75%.4
Pursuant to the GMRA, Anan sold VTB 35,714,295 EN+ GDRs for approximately US$250m, at which time EN+ shares were worth approximately US$13 per share. A few months later, on 6 April 2018, EN+ shares plummeted to about US$5.60 per share as a result of sanctions imposed on major shareholders of EN+ by the United States Treasury’s Office of Foreign Assets Control (“the OFAC sanctions”). On the same day as the OFAC sanctions (
On 12 April 2018, VTB sent a default notice to Anan, designating 16 April 2018 as the early termination date of the GMRA. According to this notice, two events of default had occurred – first, the Repo Ratio had exceeded the Liquidation Repo Ratio of 75%, thus constituting a liquidation event and an event of default under the GMRA; second, the Repo Ratio had exceeded the Margin Trigger Repo Ratio of 60% and Anan had failed to top up a cash margin of US$85m by 10 April 2018 as stipulated, and this constituted a further event of default under the GMRA.6
The legal effect of an early termination under the GMRA was that the repurchase date was brought forward to the early termination date, such that Anan was required to repurchase the GDRs at the original purchase price plus accrued interests to this date.7 In other words, Anan was compelled to repay the “loan” to VTB on the early termination date. What then occurs in such a case is a setting-off of the payments owed by each party, which the non-defaulting party is entitled to calculate.
On 24 April 2018, VTB as the non-defaulting party sent a calculation notice to Anan stating that an outstanding debt of some US$170m was owing. This sum was arrived at by calculating the outstanding amount owed (
On 23 July 2018, VTB served a statutory demand for the sum of approximately US$170m, which sum Anan failed to repay within the three- weeks period. This statutory demand then formed the basis of the winding-up petition, HC/CWU 183/2018 (“CWU 183”), presented by VTB against Anan.The proceedings below and the substantive appeal in CA 174
CWU 183 was presented by VTB on 17 August 2018. At the hearing of CWU 183 on 7 September 2018, Anan disputed the debt owed to VTB, arguing that the OFAC sanctions which caused the value of the GDRs to fall was an act of frustration as well as a
The High Court judge (“the Judge”) granted the application in CWU 183 and ordered Anan to be wound up (see,
The substantive appeal in CA 174 thus focuses on two issues: first, the applicable standard of proof where a debt governed by an arbitration agreement is disputed; second, whether this standard of proof is met in the instant case given the dispute over the quantum of debt owed by Anan to VTB.
The present application was filed by Anan to adduce new evidence for CA 174 in the form of the affidavit of Andrew Ooi Lih De dated 22 March 2019 which exhibited a report prepared by Deloitte (the “Deloitte Report”). The Deloitte Report opines that the GDRs ought to have been valued at between US$8.01 and US$8.68 each as at the early termination date of...
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