Lim Oon Kuin and others v Rajah & Tann Singapore LLP and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 04 April 2022
• Neutral Citation: [2022] SGCA 29
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal Nos 20 and 21 of 2021
• Published date: 08 April 2022
• Year: 2022
• Hearing Date: 23 November 2021
• Plaintiff Counsel: Christopher Anand s/o Daniel, Harjean Kaur, Yeo Yi Ling Eileen and Keith Valentine Lee Jia Jin (Advocatus Law LLP),Ong Ziying Clement, Suresh s/o Damodara, Leonard Chua Jun Yi, Ning Jie and Keith Lim (Damodara Ong LLC)
• Defendant Counsel: Toby Landau QC (instructed), Liew Wey-Ren Colin (Colin Liew LLC)
• Subject Matter: Civil Procedure,Parties,Joinder,Injunctions,Jurisdiction,Inherent jurisdiction to supervise conduct of solicitors,Confidence,Breach of confidence,Legal Profession,Conflict of interest
• Citation: [2022] SGCA 29

Judith Prakash JCA (delivering the judgment of the court): Introduction

The present appeals arise from the decision of the High Court judge (the “Judge”) in Ocean Tankers (Pte) Ltd (under judicial management) v Rajah & Tann Singapore LLP and another matter [2021] SGHC 144 (the “Joinder Judgment”), dismissing HC/SUM 4429/2020 (“SUM 4429”) and HC/SUM 4417/ 2020 (“SUM 4417”) which were the appellants’ applications to be joined as parties to certain litigation against the respondent law firm. We shall refer to SUM 4429 and SUM 4417 collectively as the “Joinder Applications”. The Judge heard the Joinder Applications together with HC/SUM 4317/2020 (“SUM 4317”) and HC/SUM 4318/ 2020 (“SUM 4318”) which were the respondent’s applications to strike out (the “Striking Out Applications”) the said litigation. The Judge allowed the Striking Out Applications. We employ as shorthand the term “Applications” to refer to both the Joinder Applications and the Striking Out Applications.

We heard the present appeals together with CA/CA 202/2020 (“CA 202”) and CA/CA 203/2020 (“CA 203”), which are related appeals against the Judge’s decision allowing the Striking Out Applications (see Ocean Tankers (Pte) Ltd (under judicial management) v Rajah & Tann Singapore LLP and another matter [2021] SGHC 47 (the “Striking Out Judgment”)). Our decision in respect of those appeals is Hin Leong Trading (Pte) Ltd (In Liquidation) v Rajah & Tann Singapore LLP and another appeal [2022] SGCA 28.

We begin with a brief overview of the parties, followed by an account of the events that eventually led to these appeals.

Factual background The parties

The appellants in the present appeals are: (a) Mr Lim Oon Kuin (“Mr OK Lim”); (b) Mr Evan Lim Chee Meng (“Mr CM Lim”); and (c) Ms Lim Huey Ching (“Ms HC Lim”). Mr CM Lim and Ms HC Lim are the children of Mr OK Lim, and we shall refer to the appellants collectively as the “Lims”. The Lims were the key management figures in two related companies. The first, Hin Leong Trading (Pte) Ltd (“HLT”), was an oil-trading company. The second, Ocean Tankers (Pte) Ltd (“OTPL”), was a ship management company. We shall, where appropriate, refer to HLT and OTPL together as “the Companies”.

The Companies were part of a group of companies that are or were owned by some or all of the Lims and were managed by the Lims. The group also included Xihe Holdings (Pte) Ltd (“Xihe Holdings”) and Xihe Capital (Pte) Ltd (“Xihe Capital”), which are investment holding companies (together with their subsidiaries, the “Xihe Group”), Universal Group Holdings (Pte) Ltd (“UGH”), another investment holding company, as well as numerous special purpose vehicles (“SPVs”) that each owned one or more vessels. We shall refer to them collectively as the “Group Companies”.

In or around the first quarter of 2020, HLT encountered financial difficulties and was consequently unable to meet its debt obligations. On 8 April 2020, HLT engaged the respondent law firm, Rajah & Tann Singapore LLP (“R&T”), to advise on issues arising from its insolvency. Given the interconnectedness of HLT’s and OTPL’s businesses, OTPL too engaged R&T to advise on available restructuring options. Up until 17 April 2020, the Lims were the sole directors and shareholders of the Companies. On that date, Mr OK Lim stepped down as a director amidst admissions on affidavit made in support of the Companies’ applications for interim moratoriums to be granted under s 211B of the Companies Act (Cap 50, 2006 Rev Ed) (the “Act”) for both Companies. These affidavits stated that HLT and OTPL were both in parlous financial positions, owing to, among other things, Mr OK Lim’s own conduct in having instructed that HLT’s financial statements not disclose approximately US$800m in future losses. Mr CM Lim and Ms HC Lim, however, remained directors of the Companies.

Events leading up to the appointment of Judicial Managers

As stated above, on 17 April 2020, HLT and OTPL filed HC/OS 405/2020 (“OS 405”) and HC/OS 406/2020 (“OS 406”) respectively. Each company sought the grant of an interim moratorium, pending a proposed debt restructuring exercise. Both applications were filed by R&T on behalf of the Companies.

On 21 April 2020, HLT sought leave to withdraw OS 405. In place of that proceeding, HLT filed HC/OS 417/2020 (“OS 417”) to for it to be placed under judicial management and, pending the hearing of that prayer, for interim judicial managers (“IJMs”) to be appointed. This step was in part spurred on by significant creditor resistance to, and the absence of any relevant creditor support for, the proposed debt restructuring. On 27 April 2020, the Judge granted HLT leave to withdraw OS 405 and appointed IJMs over HLT, in the face of significant creditor resistance to a debtor-in-possession restructuring.

On 6 May 2020, OTPL took a similar step. It sought leave to withdraw OS 406. In its place, OTPL filed HC/OS 452/2020 (“OS 452”) for it to be placed under judicial management and, pending that event, for IJMs to be appointed. On 12 May 2020, the Judge granted OTPL leave to withdraw OS 406 and appointed IJMs over OTPL.

On 7 August 2020, the Judge allowed OS 417 and placed HLT under judicial management, appointing the IJMs as judicial managers (“JMs”). On the same day, the Judge allowed OS 452 and placed OTPL under judicial management, appointing the IJMs as JMs.

During the period that each of the Companies was under interim judicial management, R&T acted for them on the instructions of the IJMs. At the instance of the JMs, they continued to act for the Companies after 7 August 2020.

The Applications

In the meantime, while the interim judicial management orders were still in place, Mr CM Lim and Ms HC Lim, who were still directors of the Companies, had caused legal proceedings to be commenced in the names of the Companies as follows: On 9 July 2020, OS 666 was taken out in the name of OTPL as applicant against R&T as respondent. OS 666 sought orders to restrain R&T, whether acting by their partners, officers, servants, or agents, from advising and acting for OTPL in OS 452 (OTPL’s application to be placed under judicial management), and for the IJMs and JMs of OTPL, should they be so appointed by the court subsequently. The scope of the injunction applied for included prohibitions against advising and acting for OTPL in relation to OTPL’s applications to set aside writs filed against vessels owned by the Xihe Group and SPVs that had been chartered by OTPL. On 21 July 2020, OS 704 was taken out in the name of HLT as applicant against R&T as respondent. OS 704 sought orders to restrain R&T, whether acting by their partners, officers, servants, or agents, from advising, and acting for HLT in OS 417 (HLT’s application to be placed under judicial management), and for the IJMs and JMs of HLT, should they be so appointed by the court subsequently. OS 666 and OS 704 (collectively, “the Injunction Applications”) were filed because the IJMs had retained the services of R&T as solicitors for the Companies after their appointment. In Mr CM Lim’s and Ms HC Lim’s own words, the Injunction Applications were “necessary to restrain R&T from acting for the JMs of [HLT and OTPL] to protect the confidential information, and documents disclosed by the [Lims] and [HLT and OTPL] to R&T”.

On 5 October 2020, R&T filed the Striking Out Applications. They sought to strike out the Injunction Applications on the ground, among other bases, that Mr CM Lim and Ms HC Lim no longer had the authority to start actions in the names of the Companies as the latter were already under judicial management. Whilst they contested the Striking Out Applications, the response of the Lims was to file the Joinder Applications a week later, on 12 October 2020. The purpose of the Joinder Applications was to procure the joinder of the Lims as applicants to the Injunction Applications.

On 4 November 2020, the Judge heard the Striking Out Applications and the Joinder Applications together. He allowed the Striking Out Applications and dismissed the Joinder Applications. On 27 and 30 November 2020, HLT and OTPL filed CA 202 and CA 203 respectively, appealing against the Judge’s decision to allow the Striking Out Applications.

On 9 April 2021, this court allowed the Lims’ applications for leave to appeal against the dismissal of the Joinder Applications. We considered that there was a question of general principle to be decided for the first time, as well as a question of importance upon which further argument and a decision of a higher tribunal would be to the public advantage. The question was framed as follows:

Whether one or more parties to a joint retainer can restrain the law firm in the joint retainer from acting against them on the basis that there is a risk of a breach of confidence.

On 16 April 2021, and pursuant to the grant of leave, the Lims filed the present appeals, appealing against the Judge’s decision to dismiss the Joinder Applications.

Arguments and decision below The arguments

The basis for the Injunction Applications, according to the Lims, was that from the early 1990s onwards, R&T had acted for and/or advised the Lims and the Group Companies, including the Companies. When the Companies faced financial difficulties, R&T were engaged by the Companies and the Lims to advise on how their respective interests could be best protected and on the available restructuring options. Pursuant to the engagement, R&T was provided with confidential information and documents relating to the Lims and the Companies. The Lims claim that such information was potentially relevant to the IJMs and JMs as regards (a) any investigations they might undertake into the conduct of the Lims in the management of the Companies; and (b) any adverse position they might take against the Lims and the management of the Companies. The Injunction Applications ought accordingly to be granted...