L Capital Jones Ltd v Maniach Pte Ltd

CourtCourt of Three Judges (Singapore)
JudgeSundaresh Menon CJ,Andrew Phang Boon Leong JA,Judith Prakash JA,Tay Yong Kwang JA,Steven Chong J
Judgment Date09 January 2017
Date09 January 2017
Docket NumberCivil Appeal No 175 of 2015
L Capital Jones Ltd and another
Maniach Pte Ltd

[2017] SGCA 3

Sundaresh Menon CJ, Andrew Phang Boon Leong JA, Judith Prakash JA, Tay Yong Kwang JA and Steven Chong J

Civil Appeal No 175 of 2015

Court of Appeal

Arbitration — Stay of court proceedings — Mandatory stay under International Arbitration Act (Cap 143A, 2002 Rev Ed) — Shareholder agreement containing arbitration clause — Commencement of minority oppression proceedings — Whether respondent's claim was arbitrable — Whether appellants had taken step in proceedings — Whether dispute fell within scope of arbitration agreement — Whether proceedings should be stayed in favour of arbitration — Section 6(1) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Civil Procedure — Appeals — Notice — High Court judge rejecting respondent's two alternative grounds but ultimately refusing stay in favour of arbitration — Appellants appealing against refusal of stay — Respondent not filing cross-appeal — Whether respondent could challenge High Court judge's decision on its alternative grounds without filing cross-appeal — Whether court's decision should apply only prospectively — Order 57 r 9A(5) Rules of Court (Cap 322, R 5, 2014 Rev Ed)

The respondent, Maniach Pte Ltd (“the Respondent”), entered into a joint venture with the second appellant, L Capital Jones Ltd (“L Capital Jones”) to operate the “Jones the Grocer” business through the first appellant, Jones the Grocer Group Holdings Pte Ltd (“JtGGH”). The Respondent and L Capital Jones entered into a shareholder agreement (“the Shareholder Agreement”) in pursuit of the joint venture. The Shareholder Agreement contained an arbitration clause.

The Respondent commenced minority oppression proceedings against L Capital Jones and JtGGH (collectively, “the Appellants”), seeking relief under s 216 of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”). The Appellants applied for a stay of proceedings in favour of arbitration, relying on the arbitration clause. JtGGH also applied to strike out the proceedings. The High Court judge (“the Judge”) refused the stay on the sole ground that minority oppression claims were not arbitrable. The Appellants appealed against the Judge's finding on arbitrability. The Respondent did not file a cross-appeal, but sought to rely on O 57 r 9A(5) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”) to challenge the Judge's findings which were adverse to it, namely that (a) the Appellants had not taken a step in the proceedings; and (b) the dispute fell within the scope of the arbitration agreement.

Held, dismissing the appeal:

(1) While claims under s 216 of the Companies Act generally did not raise public policy considerations against arbitration, there remained a possibility that the facts of particular s 216 claims might do so. If such policy considerations arose in minority oppression proceedings, it would not be because the claim in question was a minority oppression claim, but because of other features of the dispute: at [26].

(2) Contrary to the Respondent's claim that the integrity of the judicial process was implicated in its minority oppression claim, it was clear that the question of an abuse of the judicial process was neither the essence of the present dispute, nor a necessary step in proving the Respondent's claim. The issue in dispute was whether L Capital Jones' conduct was commercially unfair and therefore prejudicial to the Respondent. Whether or not its conduct separately also amounted to an abuse either of the Singapore or Australian judicial process was irrelevant to the resolution of the dispute. There was therefore no basis to find that the Respondent's minority oppression claim was not arbitrable: at [29] and [32].

(3) The court in Lim Eng Hock Peter v Lin Jian Wei[2010] 4 SLR 331 (“Peter LimSC”) took the position that a “decision” within the meaning of O 57 r 9A(5) of the Rules of Court referred to a “separate and independent decision” and not to a decision on the outcome of the case as a whole, as the latter was “merely a consequence” of the former. However, it was not easy to distinguish between what were properly to be treated as findings on the one hand, and mere consequences of anterior findings on the other, since many of the decisions that a court reached on the primary issues before it were premised on its findings on sub-issues, which themselves might be premised on decisions on further sub-issues. By requiring respondents to file cross-appeals, the approach in Peter LimSCENR was also inconsistent with the apparent intent of the Rules Committee, which was motivated by a desire to simplify the procedure for respondents by introducing O 57 r 9A(5): at [51], [56] and [57].

(4) A departure from Peter LimSC was necessary and justified. A broader interpretation of what counted as a “decision” within O 57 r 9A(5) of the Rules of Court should be adopted such that the court's ultimate decision on the claim or application fell within the meaning of “decision”. Successful respondents were entitled to rely on O 57 r 9A(5) to mount a case to affirm the judge's ultimate decision by raising other arguments which did not find favour with the court below, without needing to file a cross-appeal: at [65].

(5) While prospective overruling had thus far only been applied locally in criminal cases, this did not mean that it could never be justified in civil cases. However, in contrast to criminal cases, civil cases presenting exceptional circumstances that justified invoking the doctrine of prospective overruling were likely to be few and far between. In the present case, the Appellants had not relied on the decision in Peter Lim to their detriment. There were no exceptional circumstances that justified the exercise of discretion to restrict the retroactive effect of the overruling of Peter LimSCENR. The Respondent could therefore rely on O 57 r 9A(5) to seek to affirm the Judge's decision that the stay applications should be dismissed on grounds not relied upon by the Judge: at [71] to [73].

(6) An application to strike out the proceedings on the merits was a step in the proceedings, sufficient to preclude an applicant from applying for a stay. The Respondent's application to strike out the suit on the basis that it was unmeritorious was an act that signified a submission to the court's jurisdiction to resolve the dispute on the merits: at [77] and [78].

(7) The Judge erred in finding that a step in the proceedings had not been taken by JtGGH just because the striking-out application was not pursued at the oral hearing. Given the steps that JtGGH had taken to advance its striking-out application on the merits, it could not be said that JtGGH had not taken a step in the proceedings just because it decided not to pursue the application at the last moment. Even assuming that JtGGH had not yet filed any affidavits or submissions in support of its application, the very act of filing an application to strike out the suit on its merits would have constituted a step in the proceedings. Once such a step was taken, it would generally be irrevocable: at [82] and [83].

(8) The striking-out application was, on its face, an application taken out by JtGGH alone. However, whether a party had taken a step in the proceedings was a fact-sensitive inquiry that should not be approached with undue technicality or formalism. The court must look at the substance of the events that transpired to determine whether the party had taken a step in the proceedings: at [85].

(9) The fact that the striking-out application was, technically, an application filed by JtGGH alone did not in and of itself preclude the possibility that such a step might be attributed to L Capital Jones as well. It was clear that at the time JtGGH filed the application, L Capital Jones had majority control over JtGGH and it seemed reasonable to infer in the circumstances that it could and did direct JtGGH to file the application. Further, JtGGH was a nominal defendant in the proceedings and the party with a real interest in this regard was L Capital Jones. JtGGH had brought the application in order to further L Capital Jones' interests. Finally, the reliefs sought in the striking-out application were clearly sought on behalf of L Capital Jones as well. The factual circumstances irresistibly pointed to the conclusion that JtGGH was merely a nominal defendant directed by L Capital Jones, and that the real purpose behind the filing of the application was to strike out the claim against L Capital Jones. Given the unique factual matrix, L Capital Jones too had taken a step in the proceedings even though the striking-out application was technically an application brought by JtGGH alone: at [86] to [89], [91] and [92].

(10) Not all shareholder disputes necessarily fell within the scope of an arbitration agreement found in a share purchase agreement. It was critical to consider the distinct strands of the Respondent's minority oppression claim in order to determine whether they fell within the scope of the arbitration agreement. Each of the three planks of the Respondent's minority oppression claim was connected with the Shareholder Agreement. Hence, the minority oppression dispute fell within the scope of the arbitration agreement: at [95], [97], [98] and [100].

Case(s) referred to

ACTAtek, Inc v Tembusu Growth Fund Ltd [2016] 5 SLR 335 (not folld)

Carona Holdings Pte Ltd v Go Go Delicacy Pte Ltd [2008] 4 SLR(R) 460; [2008] 4 SLR 460 (folld)

Chiam Heng Hsien v Chiam Heng Chow [2015] 4 SLR 180 (not folld)

Hongkong & Shanghai Banking Corp v San's Rent A-Car Pte Ltd [1994] 3 SLR(R) 26; [1994] 3 SLR 593 (refd)

Ikumene Singapore Pte Ltd v Leong Chee Leng [1993] 2 SLR(R) 480; [1993] 3 SLR 24 (refd)

Lee Kuan Yew v Tang Liang Hong [1997] 2 SLR(R) 862; [1997] 3 SLR 489 (refd)

Lian Kok Hong v Lian Bee Leng [2016] 3 SLR 405 (not folld)

Lim Eng Hock Peter v Lin Jian Wei [2010] 4 SLR 331 (overd)


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