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

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JCA,Steven Chong JCA,Quentin Loh JAD
• Judgment Date: 29 November 2021
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 23 of 2021

AnAn Group (Singapore) Pte Ltd

and

VTB Bank (Public Joint Stock Company)

[2021] SGCA 112

Andrew Phang Boon Leong JCA, Steven Chong JCA and Quentin Loh JAD

Civil Appeal No 23 of 2021

Court of Appeal

Arbitration — Arbitrability and public policy — Winding-up proceedings — Aborted winding up — Winding-up order being reversed on appeal — Claim for liquidators' remuneration as part of costs of appeal — Ongoing arbitration proceedings — Claim in arbitration for damages for breach of arbitration agreement — Whether claim for costs of appeal non-arbitrable — Whether ongoing arbitration proceedings ousted court's jurisdiction over costs of appeal

Civil Procedure — Inherent powers — Power to order petitioner to bear liquidators' remuneration — Whether power to order petitioner to bear liquidators' remuneration formed part of court's inherent powers — Threshold for invocation of inherent powers — Fault or unjustness warranting invocation of inherent powers — Whether petitioner's conduct warranted court's invocation of inherent powers

Civil Procedure — Jurisdiction — Functus officio — Claim for liquidators' remuneration — Aborted winding up — Winding-up order being reversed on appeal — Prior decision on costs of appeal — Whether court was functus officio in relation to liquidators' remuneration

Companies — Winding up — Liquidators' remuneration — Aborted winding up — Winding-up order being reversed on appeal — Liability for liquidators' remuneration — Whether liability for liquidators' remuneration borne by company or petitioner — Court's power to order petitioner to bear liquidators' remuneration — Juridical basis of court's power — Whether power to order petitioner to bear liquidators' remuneration formed part of court's power to order costs

Held, dismissing the appeal:

(1) The orders that AnAn sought in CA 23, and AnAn's claim in the Arbitration for damages for breach of the arbitration clause, were two distinct claims with different legal bases. In the former, AnAn sought an award of costs. In the latter, AnAn was seeking contractual damages. The principles for the award of costs, and the principles surrounding the award of contractual damages, were conceptually different. Consequently, although the dispute over the Liquidators' fees could fall within the scope of the Arbitration (as a claim arising from the breach of the arbitration clause), this did not oust or displace the court's jurisdiction to adjudicate on the dispute over whether VTB should be ordered to bear the Liquidators' fees as costs: at [46] and [52] to [54].

(2) There was no risk of inconsistent pronouncements, notwithstanding the ongoing Arbitration. Any pronouncement by the court, pursuant to its powers to order costs or otherwise, would not create any res judicata in respect of AnAn's contractual claim for breach of the arbitration clause. While there appeared to be an overlap in the subject matter – namely, both CA 23 and AnAn's claim in the Arbitration involved the Liquidators' fees – any relief ordered in CA 23 would not be one that arose as a consequence of a contractual breach. The converse was true: any order made by the arbitral tribunal, if it ruled in AnAn's favour, would be one for contractual damages. In other words, any decision by the court would not have resulted in “a declaration or determination of a party's liability and/or his rights or obligations leaving nothing else to be judicially determined” in the Arbitration: at [55] and [56].

(3) In practical terms, there was no risk of anomalous outcomes. If the court found in favour of AnAn and ordered VTB to bear the Liquidators' fees, AnAn would likely not be able to recover such fees as part of its claim for damages in the Arbitration since AnAn would not have suffered any loss in respect of the fees. If the court found in VTB's favour, and ordered AnAn to bear the Liquidators' fees, AnAn would likely pursue VTB for these fees as part of its claim for damages for breach of the arbitration clause. Such a claim would be determined as a contractual claim in the Arbitration: at [57].

(4) It was common ground between AnAn and VTB that the prayers sought in CA 23 by AnAn involved an invocation of the court's adjudicatory, and not supervisory, jurisdiction. However, the mere fact that the court's adjudicatory jurisdiction was being invoked did not advance AnAn's claim against VTB. It remained necessary to draw a distinction between the adjudication of CA 174, and the adjudication of CA 23. CA 174 concerned whether the winding-up order in CWU 183 could be sustained, and upon determination of that issue, who should bear the legal costs of that appeal. CA 23 involved a posterior and distinct question of who was to bear the expenses arising out of AnAn's aborted liquidation. Consequently, in CA 23, the court was not exercising its adjudicatory jurisdiction to award costs in CA 174: at [66] to [71].

(5) More importantly, the Liquidators' fees were not “costs” under the SCJA. Nothing in the SCJA expressly conferred the court with the power to order a party apart from the company to bear a liquidator's remuneration. While the word “costs” in Para 13 might be undefined, it was clear that it did not encompass a liquidator's remuneration. There was no mention of winding-up proceedings or insolvency in the SCJA, save for the Sixth Schedule (dealing with appeals to be made to the Court of Appeal). Section 18(2) of the SCJA read with Para 13 merely specified that the court had the power to award costs: at [72] to [74].

(6) The meaning of “costs” in O 59 of the Rules of Court (2014 Rev Ed) (“ROC”) could not inform the meaning of “costs” in the SCJA. There was no canon of interpretation that allowed subsidiary legislation to inform the meaning of primary legislation. Even assuming the ROC could inform the meaning of the SCJA, AnAn did not show that “costs” in the ROC included a liquidator's remuneration. In fact, the position was to the contrary as O 1 r 2(2) of the ROC expressly excluded the application of the ROC to winding-up proceedings. If the ROC excluded winding-up proceedings, it could not then be said that any provision therein contemplated the very expenses that were incurred in the course of such excluded proceedings. For the same reason, it could not be said that liquidators' remuneration formed part of the costs “of an incidental to proceedings” under O 59 r 2(2) of the ROC, since O 59 r 2(2) was also subject to O 1 r 2(2): at [75] to [78] and [80].

(7) The case of Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd[2021] 2 SLR 478 (“Sun Electric”) did not support AnAn's argument that O 1 r 2(2) of the ROC was no barrier to the court taking guidance from O 59. While the proceedings in Sun Electric concerned an appeal against a winding-up order, the reference therein to O 59 r 2(2) ROC was for the general principle that costs of and incidental to the proceedings “shall be at the discretion of the court” which included the power to order legal costs against the non-party directors and shareholders in the event the appeal was unsuccessful: at [79].

(8) While AnAn relied on Australian legislation and case law to support its case, the Australian position was inapplicable to Singapore. The relevant foreign statute, namely, s 98(1) of the Civil Procedure Act 2005 (NSW) (the “NSW Act”), did not exclude winding-up proceedings, unlike O 1 r 2(2) of the ROC. Accordingly, the New South Wales courts were not prohibited from referring to the NSW Act in determining the issue of a liquidator's remuneration. On the other hand, the exclusionary nature of O 1 r 2(2) vis-à-vis winding-up proceedings meant that the ROC could not serve as a reference point for the treatment of “costs” in the course of such proceedings: at [81] to [83].

(9) The Court of Appeal in a prior case, Teelek Realty Pte Ltd v Ng Tang Hock[2021] 2 SLR 719 (“Teelek”), had ordered a party other than the company to be personally liable for the liquidator's remuneration and expenses. However, that case involved oppression, and was therefore readily distinguishable. Also, the Court of Appeal in Teelek made no reference to the ROC or the SCJA, and Teelek therefore did not support AnAn's interpretation of those statutes: at [84].

(10) Although the court concluded that liquidators' remuneration did not fall within the rubric of costs under the SCJA or the ROC, this did not mean that the court was left without the power to make the order sought by AnAn. The power resided in the court's inherent powers under O 92 r 4 of the ROC. Order 1 r 2(2) of the ROC did not preclude reference to O 92 r 4 in the context of winding-up proceedings, because the latter expressly stated that “nothing in these Rules shall be deemed to limit or affect the inherent powers of the Court to make any order as may be necessary to prevent injustice or prevent an abuse of the process of the Court”: at [88] and [94].

(11) The courts were entitled to rely on their inherent powers in such situations, because they involved an area in which no statutory provision applied. The SCJA, the ROC and the statutory insolvency regime in the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”) did not apply. The relevant Companies Act provisions, namely, ss 268(3), 311 and 328(1)(a), provided that upon appointment by the court and performance of their roles, liquidators were entitled to reimbursement for their reasonable remuneration and expenses, payable by default out of the assets of the wound-up company in priority to the company's other debts. The quantum of such reimbursement could be fixed by the court absent agreement between parties. But these provisions did not discuss whether a petitioner could be made liable to, or could be ordered to indemnify, a liquidator for his/her remuneration and expenses. These were separate points which the Companies Act was quite clearly not designed to cater for: at [92] and [94].

(12) Crucially, the powers concerned were designed to prevent...