Kardachi, Jason Aleksander v Attorney-General

• Jurisdiction: Singapore
• Judge: Judith Prakash JA
• Judgment Date: 22 September 2020
• Neutral Citation: [2020] SGCA 92
• Plaintiff Counsel: Ng Ka Luon Eddee, Muhammad Imran bin Abdul Rahim, Cha Meiyin and Yeow Yuet Cheong (Tan Kok Quan Partnership)
• Docket Number: Civil Appeal No 95 of 2019
• Date: 22 September 2020
• Hearing Date: 12 August 2020
• Subject Matter: Companies,Construction of statute,Directors,Disqualification,Statutory Interpretation,Rectifying construction,Section 155A Companies Act (Cap 50, 2006 Rev Ed)
• Year: 2020
• Defendant Counsel: Joel Chen Zhi'en, Evans Ng, Lim Wei Wen Gordon and Teo Meng Hui Jocelyn (Attorney-General's Chambers)
• Court: Court of Appeal (Singapore)
• Citation: [2020] SGCA 92
• Published date: 25 September 2020

Woo Bih Li J (delivering the grounds of decision of the court): Introduction

The appellant, Mr Jason Aleksander Kardachi, is a restructuring and insolvency professional.¹ In HC/OS 1282/2018 (“OS 1282”), the appellant applied for leave to act as a director under s 155A(3) of the Companies Act (Cap 50, 2006 Rev Ed). In the alternative, he applied for a declaration that he had not been disqualified as a director under s 155A(1) of the Companies Act. We set out the precise terms of the appellant’s originating summons at [18] below.

The respondent, representing the Minister for Finance (“the Minister”), opposed OS 1282. On 8 April 2019, the High Court judge (“the Judge”) dismissed OS 1282. The Judge held that s 155A(1) was triggered on 8 January 2018. Thus, the appellant was disqualified as a director for a five-year period which commenced on 9 January 2018. The Judge also dismissed the appellant’s leave application under s 155A(3).

The appellant appealed against the entirety of the Judge’s decision. On 12 August 2020, we dismissed the appeal with brief oral grounds. However, in respect of the date of disqualification, we held that s 155A(1) was not triggered on 8 January 2018. It was instead only triggered on 6 August 2018. As a result, the appellant was disqualified from 7 August 2018.

At the hearing of the appeal, we indicated that we would issue detailed grounds in due course given the important legal issues that arose in this case. These issues included the proper construction of s 155A(1) as well as the relevant principles in determining whether leave should be granted under s 155A(3).

The relevant statutory provision

Section 155A of the Companies Act is a provision that came into force on 3 January 2016.² Section 155A states as follows:³

Disqualification for being director in not less than 3 companies which were struck off within 5-year period

155A.—(1) Subject to subsection (5), a person — (a) who was a director of a company (Company A) at the time that the name of Company A had been struck off the register under section 344; and (b) who, within a period of 5 years immediately before the date on which the name of Company A was struck off the register under section 344 — (i) had been a director of not less than 2 other companies whose names had been struck off the register under section 344; and (ii) was a director of those companies at the time the names of the companies were so struck off the register,

shall not act as director of, or in any way (whether directly or indirectly) take part in or be concerned in the management of, any company or any foreign company to which Division 2 of Part XI applies for a period of 5 years commencing after the date on which the name of Company A was struck off.

(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years or to both. (3) A person who is subject to a disqualification under subsection (1) may apply to the Court for leave to act as director of, or to take part in or be concerned in the management of, a company or a foreign company to which Division 2 of Part XI applies during the period of disqualification upon giving the Minister not less than 14 days’ notice of his intention to apply for such leave. (4) On the hearing of any application under this section, the Minister may be represented at the hearing and may oppose the granting of the application. (5) This section shall only apply where Company A and the companies referred to in subsection (1)(b)(i) were struck off on or after the date of commencement of section 76 of the Companies (Amendment) Act 2014.

At the outset, we note that a person who is disqualified under s 155A(1) is not merely prohibited from acting as a director. He is also not permitted to “take part in or be concerned in the management of, any company or any foreign company to which Division 2 of Part XI [of the Companies Act] applies”. Accordingly, in these grounds of decision, phrases such as “disqualified as a director” and “leave to act as a director” should be understood as no more than convenient shorthands.

Background facts

The following facts were not in dispute. On 6 September 2010, the appellant was appointed as the Managing Director of Borrelli Walsh Pte Ltd (“Borrelli Walsh”).⁴ Borrelli Walsh is an international consulting company that specialises in restructuring, insolvency and forensic accounting.⁵ The appellant is based in its Singapore office.⁶

In the course of his work as a restructuring and insolvency professional, the appellant would be appointed as a director of distressed or insolvent companies. According to the appellant, this was to ensure that he had control over these companies and unfettered access to their books and records.⁷

In 2010, the appellant undertook the task of restructuring an international group of companies known as the Global Brands Group (“GB Group”). In order to “quickly seize control of the assets of the GB Group and minimize the risk of the dissipation of the same”,⁸ the appellant was appointed to the boards of various companies in the GB Group. On 8 November 2010,⁹ the appellant was appointed as a director of the following four companies: Global Brands F&B Pte Ltd (“GB F&B”); Consolidated Brands (Asia) Pte Ltd (“CB Asia”); Global Brands Retail Pte Ltd (“GB Retail”); and Global Brands Holdings Pte Ltd (“GB Holdings”).

Subsequently, these four companies were struck off by the Registrar of Companies (“the Registrar”) under s 344 of the Companies Act:¹⁰

S/N	Name of Company	Date of Striking Off
1	GB F&B	7 November 2016
2	CB Asia	8 January 2018
3	GB Retail	8 January 2018
4	GB Holdings	6 August 2018

As of the dates on which they were struck off, all four companies had failed to lodge their annual returns under s 197 of the Companies Act for at least three years.¹¹ This gave the Registrar reasonable cause to believe that they were not carrying on business or were not in operation.¹² Indeed, there was no dispute that all four companies were insolvent and had ceased business prior to the appellant’s appointment as a director.¹³

For present purposes, it suffices to note that the appellant contended that there were exculpatory circumstances in respect of his failure to procure the striking off of the four companies under s 344A of the Companies Act before they were struck off by the Registrar.¹⁴ We will elaborate on these circumstances when we set out our reasons for dismissing the appellant’s leave application at [84]–[96] below.

In late August 2018, the appellant was unable to lodge documents electronically through the Accounting and Corporate Regulatory Authority’s (“ACRA”) web portal.¹⁵ His associate in Borrelli Walsh sought ACRA’s assistance to lodge the documents. On 12 September 2018, ACRA sent an e-mail to the appellant’s associate which stated as follows:¹⁶

…

I refer to your email of 12 September 2018.

2 Based on our record, Mr Jason Aleksander Kardachi has been disqualified to be a director. As a consequences [sic] of the disqualification, he will not be able to perform any electronic transactions via Bizfile+ which explains the error message your [sic] encountered. 3 If Mr Jason Aleksander Kardachi wishes to find out more on his disqualification, kindly advise him to write in directly to us. Thank you.

…

According to the appellant, this was the first time that he had been informed about his purported disqualification.¹⁷ This led to a series of correspondence between the appellant and ACRA through e-mail. On 14 September 2018, the appellant wrote to ACRA, seeking to find out “the reason behind [his] disqualification as a director”.¹⁸ ACRA replied on the same day:¹⁹

Dear Mr Jason Kardachi,

We refer to your email of 14 September 2018.

2 Our record shows that you are listed on our register as a director of not less than 3 companies that had been struck off by ACRA pursuant to section 344(1) of the Companies Act, Cap. 50 (“the Act”). 3 For your appointment as a director of at least 3 companies that were struck off by the Registrar within 5 years, you have been disqualified pursuant to section 155A of the Act from being a director of any existing company for a period of 5 years from 8 January 2018. During this period of disqualification, you will not be able to perform any electronic transactions via Bizfile+. 4 On your disqualification under section 155A of the Companies Act, Cap. 50 (“CA”), we would advise you to seek legal advice under section 155A(3) CA for an application to the High Court for leave to act as a director of, or to take part in or be concerned in the management of a company. Thank you.

…

[emphasis added]

On 27 September 2018, the appellant requested ACRA to “provide the full name and UEN number of each of the relevant Companies and the dates that they were struck off”.²⁰

On 2 October 2018,²¹ ACRA replied to the appellant as follows:²²

Dear Mr Jason Kardachi,

We refer to your email of 27 September 2018.

2 Attached herein is the registered letter sent to you with regard to your disqualification under section 155A of the Companies Act, Cap. 50 (“CA”). The letter contains the names and UEN numbers of the struck off entities which you requested for. Thank you.

…

We reproduce the letter that was attached by ACRA to its e-mail dated 2 October 2018 (“31 August 2018 Letter”):²³

…

DISQUALIFICATION UNDER SECTION 155A OF THE COMPANIES ACT

You were listed on our register as a director of the following companies that had been struck off by ACRA pursuant to section 344(1) of the Companies Act:

Name of Company U

...