Golden Hill Capital Pte Ltd and others v Yihua Lifestyle Technology Co, Ltd and another

• Judge: Judith Prakash JCA
• Judgment Date: 30 August 2021
• Neutral Citation: [2021] SGCA 85
• Citation: [2021] SGCA 85
• Defendant Counsel: Tan Tee Jim SC, Gan Theng Chong, Melissa Ng and Tan Sher Meen (Lee & Lee) (instructed), Sharon Chong Chin Yee, Amanda Chen, Nandhu, Sim Ling Renee and Vivian Yeong (RHT Law Asia LLP)
• Hearing Date: 22 July 2021
• Plaintiff Counsel: Harpreet Singh Nehal SC, Jordan Tan and Victor Leong (Audent Chambers LLC) (instructed), Cheng Wai Yuen Mark, Chew Xiang, Ho Zi Wei and Tan Tian Hui (Rajah & Tann Singapore LLP)
• Docket Number: Civil Appeal No 1 of 2021 (Summons No 61 of 2021)
• Published date: 02 September 2021
• Court: Court of Appeal (Singapore)
• Subject Matter: Civil Procedure,Rules of court,Appeals,Service,Non-compliance

Steven Chong JCA (delivering the grounds of decision of the court): Introduction

This application arose out of CA/CA 1/2021 (“CA 1”), which is an appeal by the shareholders (“Shareholders”) of HTL International Holdings Pte Ltd (“the Company”) against the decision of the High Court Judge (“Judge”) in HC/SUM 3963/2020 (“SUM 3963”).

In SUM 3963, the Shareholders applied under s 227R of the Companies Act (Cap 50, 2006 Rev Ed) (“CA”) (now s 115 of the Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018)) for the court to declare null and void the sale of the Company’s interests in its subsidiaries to Golden Hill Capital Pte Ltd (“Golden Hill Capital”). The named parties to SUM 3963 were the Shareholders and the judicial managers (“JMs”) of the Company. Golden Hill Capital and its beneficial owners (collectively, “the Phua Group”) were also allowed to participate in the proceedings, albeit in their capacity as non-parties.

The Judge dismissed SUM 3963 and awarded costs in favour of the JMs and the Phua Group. Dissatisfied, the Shareholders filed CA 1 appealing against the Judge’s decision but omitted to serve the notice of appeal (“NOA”) on the Phua Group. The Phua Group thus brought the present application seeking the following: that the NOA be struck out on the basis that it was not served on the Phua Group; alternatively, that the Shareholders be barred from seeking orders in CA 1 which directly affect the Phua Group; in the further alternative, that the documents filed in CA 1 be served on the Phua Group, and that the Phua Group file a Respondent’s Case and be allowed to participate in CA 1 as respondents to the proceedings.

This application raised several novel issues pertaining to the service of the NOA on a non-party. In particular, is it mandatory for an appellant to serve the NOA on a non-party who had participated in the proceedings below? If not, can the court nevertheless direct, in the exercise of its discretion, that the NOA (and other appeal papers) be served on that non-party?

On 22 July 2021, we allowed the Phua Group’s application to the extent of their participation in CA 1 as respondents to the proceedings. We set out the detailed grounds for our decision below.

Facts Background facts

The Company is the holding company of a group of companies involved in the furniture business (collectively, “the HTL Group”). The original founders and owners of the HTL Group were Mr Phua Yong Tat and Mr Phua Yong Pin (“the Phua Brothers”), who are the beneficial owners of Golden Hill Capital. In 2016, the Company was fully acquired by the Shareholders. Despite the acquisition, the Phua Brothers retained management of the Company and the HTL Group.

Subsequently, the Company ran into financial difficulties. On 5 May 2020, the Phua Brothers, through the Company, obtained an order for the interim judicial management of the Company. After the interim judicial management order was made, the Company’s interim judicial managers, on behalf of the Company, entered into a share purchase agreement (“SPA”) with Golden Hill Capital on 28 May 2020, under which Golden Hill Capital was to purchase the Company’s interests in its subsidiaries (“the Asset”) for US$80m. On 13 July 2020, the Company was placed under judicial management.

On 19 August 2020, another entity, namely Man Wah Holdings (“Man Wah”), made an offer to purchase the Asset. The JMs invited both Golden Hill Capital and Man Wah to provide “anything further” they wished to communicate in relation to their respective offers by 26 August 2020. Upon Man Wah’s request, the JMs extended this deadline to 31 August 2020. On that date, Golden Hill Capital submitted a revised offer of US$100m. Man Wah also submitted an offer of US$100m, with an additional promise to pay US$10m above any offer made by the Phua Group. The JMs subsequently sold the Asset to Golden Hill Capital for US$100m on 7 September 2020.

On 8 September 2020, Man Wah conveyed a further improved offer for the Asset, which was again rejected by the JMs. As Man Wah was the Shareholders’ preferred buyer, the Shareholders commenced SUM 3963 on 18 September 2020 seeking the following relief pursuant to s 227R of the CA: an order to declare the Company’s sale of the Asset to Golden Hill Capital null and void; an order to direct the JMs to accept Man Wah’s offer dated 31 August 2020 or 8 September 2020; and an order to restrain the JMs from proceeding with any resolution and/or taking steps to wind up the Company.

Proceedings and decision in SUM 3963

On 18 September 2020, a Pre-Trial Conference (“PTC”) for SUM 3963 was held before the Assistant Registrar Karen Tan (“AR Tan”). Counsel for the Phua Group appeared together with counsel for the Shareholders, the JMs and Man Wah. During the PTC, counsel for the Phua Group informed AR Tan that the Phua Group wished to file a reply affidavit in response to the Shareholders’ affidavit. The Shareholders objected to the Phua Group participating in SUM 3963 but AR Tan disagreed and explicitly directed the JMs and the Phua Group to file reply affidavits and submissions in respect of SUM 3963. The Shareholders did not appeal against these orders.

Subsequently, the matter was heard before the Judge on 9 November 2020. During the hearing, counsel for the Phua Group made submissions on the Phua Group’s behalf and, consistent with AR Tan’s directions, the Judge allowed the Phua Group, the JMs and the Shareholders to participate and be heard. During the hearing itself, no objections were taken as regards the Phua Group’s participation in the matter.

On 24 November 2020, the Judge dismissed the Shareholders’ application. On 15 April 2021, the Judge delivered his detailed grounds of decision in Re HTL International Holdings Pte Ltd [2021] SGHC 86 (“GD”). For present purposes, we summarise only the aspects of the Judge’s decision which are material to the present application: The court would not interfere with the JMs’ decision under s 227R of the CA unless it could be shown that the JMs’ conduct had been plainly wrongful, conspicuously unfair, or perverse (GD at [43]). The JMs’ assessment that Golden Hill Capital’s offer promised superior shareholder returns was justified on the evidence before the court (at [63]). The exigencies of the situation facing the Company were such that the JMs had to make a decision that would resolve the Company’s problems sooner rather than later (at [67]). On the facts, Man Wah’s offer would take a longer time to resolve the Company’s problems than Golden Hill Capital’s offer (at [74]). There was fair consideration by the JMs of the various alternative offers. The JMs provided equal opportunities to Man Wah and Golden Hill Capital to put in “anything further” in respect of their original offers by 26 August 2020. Even when the Phua Group had emphasised the urgent need to complete the SPA, the JMs had agreed to Man Wah’s request to extend the deadline to put in further matters to 31 August 2020 (at [75] and [77]). The Shareholders had not established that the JMs had caused them any prejudice, much less unfair prejudice. The JMs could not be faulted for any plainly wrongful, conspicuously unfair or perverse conduct (at [83]).

The Judge also ordered the Shareholders to pay S$18,000 in costs to the Phua Group (“Phua Group Costs Order”) after hearing the parties on costs (GD at [84]).

Events leading up to present application

On 5 January 2021, the Shareholders filed the NOA against the “whole of the [Judge’s decision on 24 November 2020] dismissing the [Shareholders’] application vide HC/SUM 3963/2020 and against the cost orders made in relation thereto on 22 December 2020” [emphasis added]. The NOA was served on the JMs but not on the Phua Group. The Phua Group only came to know that the NOA had been filed when the JM’s solicitors wrote to the Phua Group’s solicitors on the same day (ie, 5 January 2021) informing them that the NOA had been filed and that “the outcome of the appeal [might] potentially affect [the Phua Group’s] rights under the [SPA]”.

On 28 May 2021, the Shareholders filed the Appellant’s Case, the Form of the Core Bundle, the Appeals Information Sheet, and the Form of the Record of Appeal in CA 1. Again, none of these documents were served on or otherwise provided to the Phua Group by the Shareholders. The Phua Group only came to know of the existence of these documents when the JMs’ solicitors sent them to the Phua Group’s solicitors later that same day.

On 1 June 2021, the Phua Group’s solicitors wrote to the JMs’ and Shareholders’ solicitors seeking their confirmation that the Phua Group was entitled to file a Respondent’s Case in CA 1. On the same day, the JMs’ solicitors confirmed that the JMs had no objections to the Phua Group filing a Respondent’s Case. On 3 June 2021, the Shareholders’ solicitors replied to object to the Phua Group’s participation on the basis that there was “no necessity and basis” for it to do so.

Following this, the Phua Group requested that a Case Management Conference (“CMC”) be held for the parties to obtain directions on the Phua Group’s entitlement to participate in CA 1. During the CMC, which was held before AR Gan Kam Yuin (“AR Gan”) on 10 June 2021, the Shareholders reiterated their objection to the Phua Group’s participation in the appeal. AR Gan considered that it was for this Court to give the directions sought by the Phua Group. Consequently, AR Gan gave timelines for the Phua Group to file the present application, in the event that the Shareholders continued to object to its participation in the appeal. To avoid holding up the timelines, AR Gan also directed the Phua Group to serve its Respondent’s Case on the Shareholders and the JMs (without filing the Case on eLitigation) by 30 June 2021.

As the Shareholders continued to object to the Phua Group’s participation in CA 1, the present...