Liquidators of Dovechem Holdings Pte Ltd v Dovechem Holdings Pte Ltd (in compulsory liquidation)

CourtHigh Court (Singapore)
JudgeJudith Prakash J
Judgment Date30 June 2015
Neutral Citation[2015] SGHC 167
Citation[2015] SGHC 167
Published date09 September 2015
Docket NumberBill of Costs No 101 of 2013 (Summonses Nos 1561 and 1577 of 2014)
Plaintiff CounselKannan Ramesh SC, Marina Chin and Keith Tnee (Tan Kok Quan Partnership)
Subject MatterInsolvency law,winding up,liquidator
Defendant CounselDenis Tan and Thomas Ng (Toh Tan LLP)
Hearing Date23 February 2015,25 February 2015,15 October 2014,26 February 2015
Date30 June 2015
Judith Prakash J: Introduction

In September 2011, Dovechem Holdings Pte Ltd (“the Company”) was placed in liquidation. Messrs Cosimo Borrelli, Hamish Alexander Christie and Jason Aleksander Kardachi (collectively “the Liquidators”) were appointed, jointly and severally, as the liquidators of the Company. They were involved in this work for some 18 months and subsequently presented their bill of costs for taxation. The issues before me involve the accuracy and reasonableness of the bill presented and raise questions as to the basis on which liquidators should charge for their services.

By Bill of Costs No 101 of 2013 (“the Bill”) the Liquidators claimed as remuneration for their work between 21 September 2011 and 31 March 2013: $1,464,097 for Section 1 (work done other than for taxation); $3,000 for Section 2 (work done for taxation); and $82,730 for Section 3 (disbursements).

The majority shareholders of the Company (“the Majority Shareholders”) opposed the Bill on multifarious grounds. As a result, the hearing of their challenges before the Assistant Registrar (“the AR”) was prolonged, taking place on five occasions between 28 January 2014 and 17 March 2014. Over the course of the hearing, at the AR’s suggestion, the Liquidators reviewed the Bill and voluntarily reduced the fees claimed under Section 1 by $250,136 to $1,213,961. At the conclusion of the hearing, the AR allowed the sum of $667,678.55 under Section 1, thus reducing the Bill by a further 45%. This substantial reduction not only, quite predictably, dismayed the Liquidators but it also did not satisfy the Majority Shareholders. Both parties filed applications for review. The AR also awarded the Liquidators $7,000 for Section 2 in view of the prolonged hearing.

Background Events leading to the liquidation of the Company

The Company was incorporated to be the holding company of various businesses, mainly in the chemical and paint industries, developed by one Mr Ng Joo Soon (“NJS”) and his brothers and nephews. The Dovechem Group headed by the Company was successful in business for many years and at its peak had an annual turnover of over $500m. It comprised several companies in Singapore and abroad. Among these was Dovechem Industries Pte Ltd (“DIPL”) which was wholly owned by the Company. DIPL had a substantial shareholding in two Indonesian companies, viz, PT Dover Chemical (“PT Dover”), a chemical manufacturing and trading company, and PT Dovechem Maspion Terminal (“PT Maspion”). Another relevant company in the Group was a BVI company, Kunshan Grand Shanghai Enterprise & Development Co Ltd (“Kunshan Ltd”) which owned and operated a golf course and resort in Kunshan, China.

The Company held a 41.67% interest in Kunshan Ltd (“the Kunshan Shares”). Some years prior to the liquidation, the Company pledged 22.1% of the Kunshan Shares to a company called Goldtrend International Ltd (“Goldtrend”) as security for a loan of US$3,325,000. The loan was taken by Kunshan Ltd to assist the Company which was then experiencing some financial difficulty.

Before 2002, NJS owned 52% of the shares of the Company. His brothers, Ng Joo Tian and Ng Ju Aik, each held 17% of the shares whilst his nephews, Anta Ng and Andrew Ng, were not shareholders. In 2002, the Company had to be re-structured due to financial problems arising from the 1998 Asian financial crisis. After the re-structuring, NJS’s shareholding was reduced to 24% whilst Andrew Ng acquired a 25% shareholding and Anta Ng a 17% shareholding. The shareholdings of NJS’s brothers remained unchanged. Together, the brothers and nephews held 76% of the Company’s shares. They make up the Majority Shareholders referred to in [3] above.

After the re-structuring, NJS became non-executive chairman of the Dovechem Group while the Majority Shareholders managed its operations. They controlled the board, with three out of four board seats, and also sat on the boards of various direct and indirect subsidiaries of the Company.

In 2008, disputes arose between the Majority Shareholders and NJS. These disputes resulted in legal actions in 2009/2010. There were two law suits started by NJS against the Company as well as a suit commenced by Thiam Joo Pte Ltd (a wholly-owned subsidiary of the Company) against NJS. The latter suit (“Suit 833”), relating to the employment of one Ms Lidya Susanti in Thiam Joo Pte Ltd, continued to subsist during the liquidation process.

In October 2010, the directors of the Company made a statutory declaration declaring that the Company was insolvent by reason of its liabilities, and appointed Ernst & Young Singapore (“EY”) as the provisional liquidators of the Company. The appointment of the provisional liquidators lapsed on 15 May 2011 after objections were raised by NJS to their application for a further extension of their appointment.

On 15 July 2011, NJS applied to wind up the Company and the winding-up order was made on 21 September 2011. The Liquidators were appointed under the order and carried out their duties until the Majority Shareholders and NJS reached an in-principle settlement on 18 December 2012. The Liquidators were asked to suspend work while the parties worked out the details of their settlement. However, as the AR alluded to in his findings summarised below, work continued to be performed by the Liquidators to facilitate the winding up process.

Under the terms of the settlement, the Liquidators’ fees were to be absorbed by the parties. The Liquidators put forward a figure which the Majority Shareholders found objectionable. The Liquidators then moderated the fee by 15%, or $149,597, but the new figure was still too high for the Majority Shareholders. The Liquidators then drew up the Bill for the reduced figure of $1,464,097 and filed it on 14 June 2013. The Majority Shareholders filed their notice of objection to the Bill as drawn and participated actively in the taxation that followed. NJS, however, was content to be an observer and leave the decision to the court.

Brief details of the Bill

The Bill was drawn up on the basis of the manpower employed by the Liquidators in conducting the liquidation and the number of hours each person spent on work related to the Company. It detailed that, apart from administrative staff who had spent 76.8 hours on such work, 3,483 hours had been spent by the Liquidators themselves and their “professional” employees. The employees concerned bore the titles of “Accountant”, “Associate”, “Assistant Manager”, “Manager”, “Senior Manager” and “Director”, the most junior being “Accountant”. Altogether, apart from the three Liquidators and the administrative staff, nine employees were involved in the liquidation. The Bill set out the time spent by each of these persons, including the administrative staff and gave the charge-out rates of each of them as follows:

Position Rate per hour Total time spent in hours
Liquidators 1 and 2 $1,000 177.8
Liquidator 3 $960 285.2
Director $890 58.8
Senior Manager $570 165.1
Managers (2) $470 965.7
Assistant Manager $360 59.7
Associates (3) $270 992.1
Accountant $140 778.6
Administrative staff $180 76.8

The details of the work done by the Liquidators were set out in Annex A which ran to some 36 pages. The Liquidators stated that since their appointment, substantial work had been undertaken to try and resolve various disputes between NJS (and his supporters) and the Majority Shareholders and, in parallel, to realise the assets of the Company in the most efficient and effective manner. The Liquidators stated that their primary focus was: to work with the Stakeholders and, based upon the available books and records, to understand the financial and operational affairs of the Dovechem Group and their preparedness to facilitate a commercial resolution or settlement of the various disputes between them; to identify and gather the books and records of the Dovechem Group in order to establish the assets and liabilities of the Group; to identify and establish control over the assets of the Group in order to protect and preserve their value pending realisation; and to undertake the investigations necessary in respect of the assets and liabilities of the Group.

The Liquidators also described the assets of the Dovechem Group and the work undertaken in respect of each of the assets. In particular, they detailed the steps taken to sell the shares of PT Dover, of PT Maspion and of Kunshan Ltd. Details were given of the Liquidators’ involvement in Suit 833 and other litigation. Subsequently, at the request of the Majority Shareholders, the Liquidators provided them with voluminous documents relating to the work done.

The taxation proceedings

During the taxation of the Bill before the AR, the Majority Shareholders, through their counsel Mr Denis Tan, raised a plethora of objections to the Bill. They disputed the number of people involved in the work, the rates they charged, the hours that they charged for, and the very necessity for various items of work done. In the view of the Majority Shareholders, the Bill was exorbitant and the Liquidators had conducted a great deal of unnecessary work. One of their main arguments was that from the time of appointment the main focus of the Liquidators should have been to realise the three main assets of the Company, namely, the shareholdings in PT Dover, PT Maspion and Kunshan Ltd. Other work done by the Liquidators was a duplication of the work of the provisional liquidators EY. Further, the Liquidators did not have to deal with operational issues as the ongoing operations of the subsidiaries were managed by the shareholders.

The AR had, in the course of the hearing, suggested that the Liquidators consider reducing their Bill. The Liquidators accepted the suggestion before the close of the...

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3 cases
  • Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and others
    • Singapore
    • High Court (Singapore)
    • 14 October 2015
    ...on the ground that it is arbitrary (see Liquidators of Dovechem Holdings Pte Ltd v Dovechem Holdings Pte Ltd (in compulsory liquidation) [2015] SGHC 167 (“Dovechem”) at [84]. I must confess at the outset that — for the reasons which are set out below — I likewise applied an additional disco......
  • nTan Corporate Advisory Pte Ltd v TT International Ltd
    • Singapore
    • High Court (Singapore)
    • 22 August 2017
    ...approach was recognised and followed in Liquidators of Dovechem Holdings Pte Ltd v Dovechem Holdings Pte Ltd (in compulsory liquidation) [2015] 4 SLR 955 (“Dovechem”) and Kao Chai-Chau Linda v Fong Wai Lyn Carolyn [2016] 1 SLR 21 (“Linda Kao”). In this connection, a successful outcome entit......
  • Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and others
    • Singapore
    • High Court (Singapore)
    • 14 October 2015
    ...on the ground that it is arbitrary (see Liquidators of Dovechem Holdings Pte Ltd v Dovechem Holdings Pte Ltd (in compulsory liquidation) [2015] SGHC 167 (“Dovechem”) at [84]. I must confess at the outset that — for the reasons which are set out below — I likewise applied an additional disco......

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